Prices got a boost early this week following the announcement that Saudi Arabia and Russian Federation had agreed to cooperate to stabilize the oil market.
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Crude oil prices climbed more than 1% on Wednesday, after the news of a possible deal on output freeze between the world’s top oil producers’ edges closer to completion. USA gasoline stockpiles slid by 2.34 million barrels last week, the API said, according to people familiar with the figures.
Still, on Wednesday, the director for global affairs at state-run National Iranian Oil Co., Mohsen Ghamsari, said that Iran would be ready to decide on capping production only after its output hit pre-sanctions levels, which would amount to just over 4 million barrels a day, according to Bloomberg.
As oil producers are moving to reconcile their previously irreconcilable stances on a global output freeze deal, OPEC’s secretary-general Mohammed Barkindo will be meeting the Saudi and Algerian oil ministers in Paris on Friday as part of a push to reach an agreement that would prop up crude prices, Reuters reported on Thursday, quoting OPEC sources and an Algerian official.
Output in Iraq, OPEC’s second-biggest producer, rose to 4.638 million barrels a day in August from 4.606 million barrels a day the previous month, the person said.
In London, Brent North Sea oil for November delivery gained US$2.01 to US$49.99 a barrel. The Saudi oil minister noted ‘there is no need now to freeze production. “I hope by the end of 2016 or early next year, we would be able to reach that level”. October delivery of crude oil on the NYMEX, meanwhile, tacked on 0.42% to $45.02 a barrel. However, the meeting could not produce fruitful results.
US crude stocks have been at record highs in the last two years, thanks in part to the shale oil boom that boosted output. Producers have been discussing proposals to limit output after a glut cut prices by more than half from two years earlier.
“Broadly speaking, there continues to be no firm indication that OPEC could convince all members to freeze production at current output levels”, said Robbie Fraser, commodity analyst at Schneider Electric. “So, the amount of crude oil that’s going to come out of the Bakken, out of the Permian, out of Eagle Ford, is just going to be very large”.
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Are the media and other commentators now filling the role of unwitting boosters of the oil price by keeping the freeze issue front and centre of the current market debate? The country has boosted output quickly since the easing of sanctions in January, though additional increases may be a challenge without worldwide investment and technology.
