On Tuesday, Saudi Arabia and Russian Federation, the world’s two largest crude-oil exporters, said they would freeze their oil production at the January levels as long as other major producers followed suit.
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Iran’s envoy to the Organisation of the Petroleum Exporting Countries (Opec), Mehdi Asali, said it was “illogical” to ask Iran to freeze production levels in comments to the Shargh daily newspaper before the talks on Wednesday.
Iran says a quadripartite meeting that it hosted on Wednesday with the visiting oil ministers of Venezuela, Iraq and Qatar over measures to boost oil prices had ended with an agreement for OPEC and non-OPEC oil producers to keep their current output ceiling to help stabilize the market and boost the prices.
Russia, Saudi Arabia, Qatar and Venezuela are ready to freeze oil production at January’s level if other producers do the same.
Natixis lead oil market analyst Abhishek Deshpande told journalists in Paris that a freeze in production was not enough and is likely to unravel, with only an aggressive cut sufficient to mop up excess crude in the market.
On Wednesday, Venezuelan Oil Minister Eulogio Del Pino and Iraqi Oil Minister Adel Abdel Mahdi will travel to Tehran for talks with their Iranian counterpart Bijan Zanganeh.
Iran exported around 2.5 million barrels per day (bpd) of crude before 2012, but sanctions, imposed by world powers to curb Tehran’s nuclear program, cut its oil shipments to about 1.1 million bpd. U.S. crude rose by $1.90, or 6.4 percent, to $30.94 a barrel.
Traded volume in US crude futures was just above 500 million barrels, lower than the past three sessions, Reuters data showed, despite the price gains and activity prior to options expiry.
“There is already too much oil on the market”, Fathi said.
Iranian officials are angry that while it was not able to export because of worldwide sanctions other countries raised output pushing down prices.
A production cap for top oil producers isn’t feasible when a record amount of oil is being pumped, according to one analyst.
The International Energy Agency expects global oil demand of 96 million barrels a day in 2016, though production crossed 97 million daily barrels towards the end of 2015. “I would not be surprised to see prices retreating again by a big margin in coming days”.
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“Kuwait hopes the agreement would provide a positive atmosphere for oil prices, and for the market to regain balance, and calls on all to support stability of markets”, he said.
