After the meeting, Novak said that four countries – Russia, Saudi Arabia, Qatar and Venezuela – were ready to freeze oil production at January levels if other oil producers were to join the initiative.
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The price of benchmark Brent crude rose as high as $35.55 a barrel on Tuesday on hopes for a production deal, but it has since dropped back to $32.15, showing many investors doubt an agreement can be reached, that it would be respected, and would boost oil prices much.
Eulogio Del Pino the Oil Minister of Venezuela said additional talks would be held with Iraq and Iran Wednesday in the Iranian capital of Tehran.
“Getting an agreement from these is going to be very hard, particularly in the case of Iran”, he added, referring to the fact the country has only just started exporting after Western nuclear-linked sanctions were lifted. Saudi Arabia and its Gulf allies are fighting proxy conflicts with Russian Federation and Iran in the region, including in Syria and Yemen.
Although the plan indicates at least temporary cooperation between some of the world’s biggest producers, oil prices have actually dropped about 1% today. For his part, the Venezuelan minister said he will meet his Iraqi and Iranian counterparts to discuss the production freeze proposal.
On share markets, an early rally lost steam as profit-takers moved in following some hefty gains on Monday and Tuesday.
“Iraq and Iran are the two countries that are going to contribute to growth from the OPEC nations this year”, Richard Gorry, managing director at JBC Energy Asia in Singapore, told Bloomberg Television.
Iran will load 4 million barrels of crude oil on tankers destined for Europe in the coming 24 hours, a senior official was quoted as saying on Saturday, including 2 million barrels to be bought by France’s Total.
But although USA output has begun to decline and global demand has been robust it has still not been enough to offset booming global production which has led to oil stockpiles rising to record levels. He added that the meeting reviewed the current situation of the oil market and the short- and long-term supply and demand. Saudi finances are also suffering badly, running a $98bn budget deficit last year, which it seeks to trim this year. We don’t want a reduction in supply.
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“Freezing now at the January level is adequate for the market, we believe”, he said.
