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Oil Prices Drop On Potential Increase In OPEC Output

Oil prices continued to fall on Thursday morning in Asia
Oil prices continued to fall on Thursday morning in Asia

Investing.com - Oil prices continued to fall on Thursday morning in Asia, as markets took into account the possibility of higher output from the Organization of the Petroleum Exporting Countries (OPEC).

Crude Oil WTI Futures for July delivery were trading at $71.69 a barrel at 11:15PM ET (03:15 GMT), down 0.21%. Brent Oil Futures for July delivery, traded in London, were down 0.34% at $79.53 per barrel.

Shanghai Crude Oil WTI Futures for September delivery were down 0.49% at 485.70 yuan ($76.01) per barrel.

In the face of worries over supply from both Venezuela and Iran, OPEC members could step up production as soon as June.

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Production in Venezuela plunged to 1.5 million barrels last month, its lowest level in decades due to its ongoing economic crisis. Venezuela’s crude output could drop further following a disputed presidential election, and the U.S. might impose oil export sanctions on the country.

U.S. sanctions against Iran, which currently produces 4% of global oil supplies, will also likely cause shortages later this year when trade restrictions take effect.

Geopolitical risks caused by Washington’s exit from a nuclear arms control deal with Tehran have driven prices to multi-year highs, with Brent breaking through $80 last week for the first time since November 2014.

Meanwhile, Libya, an OPEC member, cut its oil production by about 120,000 barrels per day (bpd) as unusually hot weather prompted power problems.

In response to concerns from Washington over a rally in oil prices, OPEC may decide to increase oil output to make up for the reduced supply.

OPEC and some non-OPEC major oil producers are scheduled to meet in Vienna on June 22. The group previously agreed to curb their output by about 1.8 million bpd to boost oil prices and clear a supply glut.

Any signs that the group may be heading towards an early exit from the production cut agreement would weigh on prices.

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