OPEC makes deal to extend cuts on oil production until March 2020

"We believe that continuation of the declaration is the way to go. If it announced something in agreement with the rest of OPEC, this is most welcome", he said.

Iranian officials, however, have dismissed such moves as psychological warfare, saying the country has its own ways of circumventing the American bans and selling crude oil.

Oil prices will likely increase over the next few months, but there are also many other variables besides OPEC that could impact the price, Molchanov said.

Meanwhile, Iran also has reason to be anxious that the Saudi-Russia partnership could threaten the existing strategic military alliances between Iran and Russia, explains Jaffe. Iran is funding Houthi rebels in Yemen, with whom Saudi Arabia is at war.

In other demand news, Barclays said it expected demand to grow at its slowest pace since 2011, gaining less than 1 million barrels per day year-on-year this year.

Iran has vehemently denied any involvement in the tanker attacks, which Tehran has called "suspicious". Nonetheless, al Falih urged collective action to protect vital energy supplies.

For Moscow, there's an extra incentive to extend the curbs by nine months as Russian oil companies struggle to raise production over the winter.

OPEC and its 10 non-OPEC allies, including Russian Federation, on Tuesday ratified a charter formalizing their oil market management alliance after two and a half years of collective supply cuts aimed at bolstering prices.

"This will have a varying effect on oil prices, depending on how tightly balanced the market is at the time", said Ann-Louise Hittle, vice president-macro oils, at Wood Mackenzie, a global natural resources consultancy.

The sanctions are putting Iran under unprecedented pressure.

"While this needs to be ratified by the remaining members of the OPEC+ group, this appears to be a fait accompli", ANZ analysts said in a note.

OPEC ministers meeting at the organization's secretariat also agreed to a second term for Secretary-General Mohammad Barkindo, whose three-year tenure comes up for renewal in August.

An OPEC+ panel found that inventories in industrialized countries were about 25 million barrels above the five-year average in May, according to Al-Falih.

The charter now replaces the "Declaration of Cooperation", which was reached in December 2016 between the two groups. "Putin is vitally important for OPEC". In May, the country's oil minister warned that the bloc is on the brink of collapse due to "unilateralism".

They were dismayed at the leading role non-OPEC Russia, once seen as an enemy in oil markets, was playing in shaping the group's policies.

Saudi Arabia's energy minister was confident about the outlook for oil demand after OPEC's partner ratified the group's decision to keep cutting production.

Al Falih signaled there is room for United States production, which he credited with offsetting declines in Venezuela and elsewhere. "So we are happy", he said.

  • Zachary Reyes