The meeting reflects growing concern among major oil producers about a prolonged slump in crude prices.
Advertisement
Saudi Arabia, Russia, Qatar, and Venezuela agreed to freeze oil output at January levels in a bid to shore up prices after a 70 per cent drop due to chronic oversupply.
However, this optimism was shortlived, and by mid-morning oil prices slipped once again as only Russian Federation and Saudi Arabia were willing to keep oil production low.
Iran’s is unlikely to agree to any production freeze having been frozen out of the market for years prior to the lifting of nuclear-related sanctions by world powers in January 2016.
Iraq’s production of oil last January was record heights with an average of 4.7 million barrels of oil, including oil coming from fields in the Kurdistan Region, exported a day.
Nevertheless, while the plan looked hard to implement its significance lay in that it was the first time since November 2014 that OPEC had acted to insert some uncertainty about Saudi strategy into the minds of oil market participants, the analysts added.
The price for Brent crude oil opened in NY at $33.36 per barrel, up only a fraction of a percent from the previous session. Qatar and the Emirates, both oil and gas powerhouses in their own right, also compete with each other in the aviation industry and cultural pursuits. The country would face technical constraints in cutting production in the winter because of the risk that pipelines would freeze.
Notably absent from Tuesday’s meeting was Iran, which shares control of a major underwater natural gas field with Qatar. Later, Kuwait agreed to join the initiative and maintain its oil production at the level of 3 million barrels per day.
Al-Mazrouei, who gave a keynote address at the 2016 CIS Global Business Forum in Dubai, mentioned low oil prices in passing in his speech.
“A production freeze dependent upon the involvement of Iran seems a bridge too far at this juncture”, said Matt Smith, director of commodity research at New York-based ClipperData, an energy data provider.
Advertisement
Qatari Energy Minister Mohammed bin Saleh al-Sada told a news conference that the step would help to stabilise the oil market, which has experienced price declines not seen since the early 2000s because of the pace at which supply has outstripped demand.
