“This price makes production of oil by OPEC members profitable, economical, and useful, while preventing the rivals from raising their output”, he said.
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Brent rallied to above $50 a barrel in late August, helped by growing talk of a coordinated production freeze, but prices have since fallen as few believe OPEC will act. Tensions between Iran and Saudi Arabia are already running high on a geopolitical level too.
Its total production has risen from 2.7 million bpd to 3.85 million bpd, close to the level before global sanctions were imposed in 2012.
“Oil prices continued to slide on Tuesday after the temporary spike on Monday proved unjustified by the limited agreement to cooperate between Russian and Saudi oil ministries”, said CMC Markets analyst Jasper Lawler. The current production is at 3.6 million barrels of oil a day, of which Tehran exports 2.2 million barrels a day.
Saudi Arabia and Russian Federation, the world’s top two crude-oil producers, this week pledged to cooperate to stabilise global markets, while failing to announce any specific measures to bolster prices. The market is waiting for producers and consumers’ meeting scheduled for September 26-28 in Algeria amid more speculations about output freeze talks. Rather, it has suggested that it should be exempt from production caps until it reaches its pre-sanction levels of production.
Producers that destabilised oil markets have the greatest responsibility to steady them, Iranian Oil Minister Bijan Namdar Zanganeh said last month, according to the Shana news service, without identifying any such countries.
Russia, which is not an OPEC member, is producing 10.7 million barrels per day, while the U.S.is producing 8.48 million barrels per day.
“Iran supports any decision by oil producers to return stability to oil markets”.
Seth Kleinman, the head of European energy research at Citigroup, told CNBC on Wednesday that the agreement had limited substance but worked to support the oil price, which was buoyed by the news.
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A source familiar with Gulf thinking said if no compromise with Iran were found before the meeting in Algeria, there would be time to secure one ahead of OPEC’s regular gathering in November in Vienna.
