They will meet in Vienna on June 22 to decide forward production policy. Brent crude prices dropped to $73.44 a barrel last Friday, the lowest since 2 May.
Investors expect the spat to come at the expense of U.S. oil firms, pulling down the share prices of ExxonMobil and Chevron by 1 to 2 per cent since Friday, while United States crude oil prices fell by around 5 per cent. That crimped the country's ability to export crude, limiting supply and pushing up global prices.
EIA now forecasts global petroleum and other liquids inventories will increase by 210,000 barrels per day (b/d) next year, a factor that, all else being equal, typically puts downward pressure on oil prices.Most of the growth in global oil production in the coming months is expected to come from the United States.
The push by some OPEC members to boost production reflects both internal and external pressures.
The need to increase production emerged as Venezuela's production is in free fall and Iranian production is threatened by the re-imposition of USA sanctions.
The market traded higher on expectations that the production increases could be less than the full 1.5 million bpd, at 300,000 to 600,000 bpd, said Gene McGillian, director of market research at Tradition Energy in Stamford.
Against a very uncertain oil sector backdrop, OPEC's own analysis suggests that the cartel may well have to raise production to meet rising oil demand.
In addition to Iran, OPEC members Iraq, Venezuela and Algeria said they opposed a production increase despite supply outages in countries such as Libya and Venezuela.
The Organization of the Petroleum Exporting Countries holds its biannual meeting in Vienna on Friday and is widely expected to agree to pump more, possibly supported by some other producers outside OPEC, including Russian Federation. So in this diplomatic spat they might just replace USA crude with Iranian oil.
Iran's oil minister, Bijan Namdar Zanganeh, said upon arriving in Vienna that "OPEC is not an organization to receive the instruction from President Trump and follow it".
On Saturday, Novak said he and his Saudi counterpart Khalid al-Falih had agreed to propose to the group to up production by 1.5 million bpd beginning in July.
Next Friday could be a tipping point for the large tanker market because much of the extra oil produced as a result of raising or lifting production curbs would be long-haul crude shipped from terminals in the Gulf to the east and west, creating a significant hike in tonne-mile demand and absorbing a chunk of today's excess VLCC capacity. Venezuela experiences severe production outage, and already lost 350,000 barrels / day this year with the decline accelerating. Outages due to the troubles in Nigeria and Venezuela's oil industries more than offset higher output from Saudi Arabia, Iraq and Algeria as May production fell 1,00,000 b/d from the previous month. So how could the upcoming OPEC meeting affect businesses in Texas? The risk is that Saudi Arabia will choose to go it alone, boosting output.