Oil falls as OPEC nears deal to raise production

High oil prices hurting fiscal balance, says Pradhan

During the meeting, the group is expected to raise crude output after more than a year of cutting it to stabilize once-falling prices.

Benchmark Brent crude was up $1.05 a barrel at $74.10 by 0925 GMT. The increase translates to a 1 million barrel per day adjustment on paper, as some countries won't be able to meet the quota due to supply disruptions.

Opec in theory needs the agreement of all members to clinch a deal but has in the past agreed production pacts without Iran, which has criticised the idea of raising supply as it faces United States sanctions.

Iran is particularly vocal about its objections as it braces for the impact of fresh U.S. sanctions on its oil exports after President Donald Trump quit the global nuclear agreement.

Opec has a history of hard meetings as well as clashes between Iran and Saudi Arabia.

The Organization of the Petroleum Exporting Countries (OPEC), a producer cartel de-facto led by top exporter Saudi Arabia, is meeting together with some non-OPEC members including top producer Russian Federation at its headquarters in the Austrian capital to discuss output policy. US investment bank Jefferies said an increase in "the range of 450-750,000 bpd seems the most likely outcome" of the meeting.

"Essner is betting that the Vienna meeting will yield an agreement to boost production by 500,000 to 800,000 barrels a day, far below the 1.5 million barrel figure floated recently by Russia's oil minister, Alexander Novak. Such a decision, if implemented, would have a large impact on the supply-and-demand fundamentals by creating implied stock builds averaging 0.9 million b/d in H2 2018, and 1.8 million b/d in 2019", the group said in email on Wednesday.

Given the production restraints in some countries, the one million barrels per day proposal would in reality end up adding several hundred thousand barrels to the market.

"The actual effect will be something less because not every country can respond", Saudi Arabia Energy Minister Khalid Al-Falih said. Trump has used Twitter to complain about high oil prices - and blame OPEC - twice since April. He acknowledged not all of the cartel's members could increase output, in a reference to countries such as Venezuela.

Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries.

The current standoff was partially triggered by the United States, with Trump calling directly on Opec to raise output.

While Saudi Arabia's cutting by more than required has helped Opec's compliance, involuntary reductions in Venezuela amid economic crisis and in Angola due to natural decline have had a larger impact and can not be reversed at short notice. He said the meeting would tackle over-compliance with oil output cuts and that Iran was "very cooperative".

The new deal would effectively roll back the deeper-than-intended cuts from nations such as Venezuela, returning the curbs back to the level originally agreed in 2016, the delegate said.

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