Iran has said it would not join the effort until its own crude production reached pre-sanction levels of 4.0 million barrels per day, about double its current output.
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Tehran said again this weekend it wouldn’t participate in any production freeze agreement until it is pumping 4 million barrels per day. Oil supplies eased 180,000 barrels a day in February, to 96.5 million barrels a day, on lower OPEC and non-OPEC output.
OPEC members Venezuela and Qatar also agreed to the output freezing proposal, which is aimed at increasing oil prices globally.
In recent weeks, oil prices have entered a range that makes it possible for USA oil companies to hedge their crude production in the mid-$40 per barrel range, which they could do as protection against another slide in crude prices. Any fall in oil prices below the production costs leads to only marginal income gains for consumers and increased costs of oil producers substantially, which is undesirable for any economy, summed Morgan Stanley.
United States crude futures were 17 cents higher at $37.35 a barrel at 0054 GMT.
“It has been a combination of factors: comments from Iran’s oil minister, Opec forecasting a bigger surplus, weaker Chinese industrial data and a rebounding dollar”, said analyst Fawad Razaqzada at trading firm City Index, when asked about the latest oil price losses. The Russian side has been ambiguous on the agenda of the talks, saying they will be on “cooperation between the countries in energy”.
“The positions of Russian Federation about Iran’s return as well as resumption of stability to the oil market were encouraging and very positive”, Zanganeh said, according to Shana.
Iran, which has the world’s second-largest crude reserves, pumped out 3.1 mbpd in February, up from 2.9 in January, according to OPEC.
Crude output dropped by 175,000 bpd in February to average 32.28 million bpd, it said.
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Stockpiles at the Cushing, Oklahoma grew nearly 850,000 barrels to 69.6 million in the week to March 11, bringing storage at the delivery hub for US crude futures to near capacity, traders said, citing market intelligence firm Genscape. Within a year, the oil market should be “relatively balanced”, Zamaninia told Seda. That’s up from 1.75 million barrels per day the month before that. “The sanctions that had been introduced had materially hit (Iran’s) output”, Novak said after meeting his Iranian counterpart Bijan Zanganeh.
