Meanwhile, Iran is reportedly ramping up its oil production with the goal of expanding market share that declined as a result of the previously imposed, but now-lifted sanctions. Saudi Arabia and other Organization of Petroleum Exporting Countries members will meet with Russian Federation on April 17 in Doha to discuss the proposal.
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They say if major producers agree on a production freeze this time and also hint on an additional cut in oil output, prices will rise.
Oil extended declines after Saudi Arabia’s deputy crown prince said the kingdom will freeze output only if Iran follows suit, putting in doubt the success of a proposed deal between major producers.
West Texas Intermediate (WTI) crude futures jumped almost 14% in March to end the month at $38.34 a barrel.
This change in outlook leads us to believe that oil will remain lower for longer and several analysts are monitoring the $36.50 level for further weakness.
The Islamic Republic exported about 1 million bpd of oil under sanctions.
Oil prices veered between gains and losses on Monday, as the market showed skepticism that a global agreement capping output would be reached in Qatar later this month.
His comments sent oil prices diving four percent Friday and extending the falls this week.
There’s uncertainty brewing over the upcoming OPEC meeting on April 17, and it’s dragging down crude oil prices today.
Since hitting a 13-year low at $26.05 a barrel on the 11th February, crude oil prices have rebounded by around 40%. Abhishek Deshpande, oil analyst at Natixis SA said: “What is becoming very clear is that Saudi Arabia is serious about moving away from the traditional play of adjusting prices by cutting or freezing supplies by itself”.
With Iran’s exports rising and other producers pledging to freeze output near record-high levels, an agreement would do little to address a global supply overhang that sees at least a million barrels of crude produced every day in excess of demand.
“The current rig count implies USA production… would decrease by 705,000 barrels per day yoy (year-on-year) on average in 2016, and by 375,000 barrels per day yoy in 2017”, it added.
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Data from the American Petroleum Institute showed on Tuesday that US crude oil inventories fell by 4.3 million barrels for the week to April 1.
