Opec agrees modest hike in supply after Saudi Arabia-Iran compromise

An oil pumpjack operates in the drive-thru area of a McDonald's in Bradford Pennsylvania

An oil pumpjack operates in the drive-thru area of a McDonald's in Bradford Pennsylvania

But the agreement failed to announce a clear target for the output increase, leaving traders guessing how much more OPEC will actually pump.

Benchmark Brent crude jumped $2.19 a barrel, or nearly 3 percent, to a high of $75.24 before slipping to around $75 by 1305 GMT.

Benchmark U.S. 10-year yields were up on Friday, but have declined on a weekly basis for two straight weeks.

By avoiding setting individual country targets, the deal appears to give Saudi Arabia the leeway to produce more than its official OPEC target and fill the gap left by those like Venezuela who can not pump enough to meet their official allocation.

The Organization of Petroleum Exporting Countries, OPEC, has agreed to raise oil production by around 1 million barrels per day from July 2018.

Iraq and Iran agreed last year to begin an oil swap deal this year, under which Iraq will send oil from its northern Kirkuk fields to Iran by truck, to be refined in Iran, while Iran will send the same amount of crude it receives to Iraq's southern ports for exports.

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The deal looked to be in line with many analysts' forecasts.

Saudi Energy Minister Khalid Al-Falih told reporters after the meeting that the deal was to make a "nominal" increase of 1 million barrels per day, Bloomberg News reported. The measure has helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016. But don't expect a drastic drop in oil price.

The group started withholding supply in 2017 and this year, amid strong demand, the market tightened significantly, triggering calls by consumers for higher supply. But with crude futures recently soaring to multi-year highs on strong demand, dwindling output from Venezuela and renewed US sanctions on Iran, energy ministers are anxious about the market overheating.

Another big uncertainty for oil is the escalating dispute between the United States and its trading partners, which could hit USA crude oil exports to China.

The editorial followed stinging remarks from China's commerce ministry on Thursday accusing the United States of being "capricious" over bilateral trade issues.

If a 25 percent duty on US crude imports is implemented by Beijing, American oil would become uncompetitive in China, forcing it to seek buyers elsewhere.

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