*Osama Suleiman from Vienna
The International Platts Agency for Petroleum Information confirmed that the Organization of Petroleum Exporting Countries "OPEC" and its independent allies have a good vision to deal with developments in the oil market in the next stage.
Russian Energy Minister, Alexander Novak, said that Russia was ready to increase oil production by more than 200,000 barrels per day if other countries of the OPEC-led alliance could not meet the group's new model in raising joint production by one million bpd.
The report pointed out that there are difficulties facing many producers, which prevents the achievement of the desired increase. This situation led Novak to stress, "If everyone agreed that they can not get an increase of one million barrels per day, Russia will participate in ensuring an increase of more than 200,000 bpd when needed."
The report mentioned that the meeting of ministers of producer countries in and outside OPEC in Vienna last week witnessed a broad state of convergence in the visions of producers.
It pointed to the approval of OPEC and its allies, led by Russia, to adjust the ceiling of individual oil production in line with the capacity of each country to increase joint production of up to one million barrels per day, in order to avoid an emergency shortage of supply amid a high risk situation, currently facing Venezuela, Iran and Libya.
The report pointed out that the increase in Russian production would come through the alleviation of the production cut, which was committed by Russia with OPEC in December 2016. It is to reduce the share of production of Russia by about 300 thousand barrels per day.
It noted that this reduction would reach 100 thousand barrels per day only, which represents an increase of production by 200 thousand barrels per day. It pointed out that Russian production has already hit a record level of 247.11 million barrels per day.
On the Iranian file, the Platts report said that the Indian government asked the oil refineries in the country to prepare an alternative plan for the sources of crude oil, which was imported from Iran, as an implementation of the US sanctions resolution on Iran, which will be strictly enforced as of November.
The report noted that a clear response from the Indian government on the US position on oil imports from Tehran is expected to be announced in July, government officials in India said.
The report cited India's Ministry of Oil issuing instructions to state-run refineries such as India Corp., Hindustan Petroleum Limited and Bharat Petroleum Ltd. to seek alternative sources of Iranian oil.
The report quoted an official working with refineries as he said that India's preferred alternative of oil imports is Saudi Arabia and Iraq after the US sanctions on Tehran because of geographical proximity. But the reasonable price would be the strong driver of any new deals to import crude oil, while not excluding the US production role as a competitor.
The report said, based on official sources, that the Indian Ministry of Oil will announce a new map for the import of crude oil, and taking into account the visions and estimates of local refineries, during the first week of July to take a "practical view" on imports from traditional suppliers.
Earlier this week, the US Ambassador to the United Nations Nikki Haley informed Indian Prime Minister Narendra Modi of the administration's position that all countries should not import crude oil from Iran.
The report pointed out that the American ambassador said that the US administration is convinced that Iran is the second North Korea, and must be tightened economic boycott and international sanctions deterrent.
The report said New Delhi adheres to a policy of adhering to UN resolutions on Iran and supports the implementation of international sanctions on Tehran as the sanctions should come from the United Nations and not be unilateral sanctions.
It pointed to analysts' assertion that India would have to adopt a different action strategy when applying new sanctions.
This situation differs from the previous sanctions on Iran during President Barack Obama's term when New Delhi continued to import crude from Iran on preferential terms, including Iran's acceptance of a payment mechanism through the Indian currency via the European banking channel.
The report said that India is considering all options before taking a final position on its handling of imports of Iranian crude oil.
It referred to the words of the Indian Oil Minister Dharmendra Pradhan, who said that there is no oil producer that India does not buy from.
It pointed out that the country has developed a system for the purchase of crude oil from the Sultanate of Brunei.
The report pointed to the Indian minister as he said that there is no risk of disruption of supplies because of the recent threat of sanctions from the United States on Iran. It added that India would place its national interests on the issue of Iranian imports first.
According to the international report of Platts, Iran is currently ranked third in the ranking of the largest supplier of oil to India, after Saudi Arabia and Iraq.
It also pointed to the increase in India's imports of crude oil from Iran in May 10 percent compared to April to record 705 thousand barrels per day, as the increase of imports is 45 percent last month year-on-year basis.
The report said that India would commit itself to stare operating the Iranian port of Chabahar by 2019 to facilitate the flow of trade with Afghanistan and Central Asia.
It noted that it is interesting to know that the US administration would isolate Iran economically, which prevents the development of the port of Chabahar, but the United States would cooperate with India to develop the port to promote free trade in Central Asia.
Oil prices rose at the end of last week on fears that US sanctions on Iran would block a large amount of crude from world markets at a time of rising demand.
The US crude rose more than 8 per cent throughout the week, while Brent crude rose more than 5 per cent.
"Everyone now focuses on the issue of untapped energy and the future," said Tamar Essner,, chief energy analyst at NASDAQ. She added that market's attention has shifted to a series of hiatus after weeks of oversupply by OPEC and other major producers.
The US crude rose 70 cents a barrel to settle at $ 74.15 a barrel, heading for a weekly gain of 8.2 percent. The highest price for the session was $ 74.43, the highest since November 26, 2014.
Brent crude was up $ 1.59 at $ 79.44 a barrel.
Dominic Cherichela, director of risk management at MDTN, said, "The potential shortfall may exceed the production that was agreed upon by OPEC and Russia."
He referred to the risk that supplies coming from Iran would fall further if other countries surrendered to the United States and cut imports from Tehran, the world's fifth largest oil producer.
Iran pumps about 4.7 million barrels per day to nearly 5 percent of world production, much of it to China and other energy-hungry countries like India.
The US government hopes to compensate, other major oil producers in the Organization of the Petroleum Exporting Countries and Russia, the loss of Iranian crude, but the global oil market is already scarce with sudden disruptions in Canada, Libya and Venezuela.
Many analysts and investors believe that strict enforcement of US sanctions on Iran will push prices up sharply.
"Oil prices in the hundreds are not out of the question," the Vienna-based JCP Energy consultancy said.
A Reuter's survey of 35 economists and analysts on Friday concluded that Brent's average price would be $ 72.58 in 2018, up 90 cents from a previous survey of $ 71.68, compared with an average of $ 71.15 since the beginning of this year.
