Saudi Arabia’s Foreign Minister Adel al-Jubeir says his country is “not prepared” to cut oil production to help shore up extremely low prices.
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“Given the intention of Iran to lift its oil exports back to pre-2012 levels, actual production cuts by OPEC and Russian Federation are probably needed – even if world demand advances at a healthy 1.8 per cent clip in 2016 and USA oil production is cut modestly”, said Patricia Mohr, analyst at Scotiabank.
Saudi Arabia led the Organization of Petroleum Exporting Countries in November 2014 to refrain from cutting production to boost prices in the face of growing supplies from the U.S.to Canada and Russian Federation.
Asali’s comments came as Iran’s oil minister held a four-way, closed-door talks in Tehran with his counterparts from Iraq, Venezuela and Qatar.
But Iran, Opec’s fifth largest producer, refused to take part in the accord, laying bare the divisions within the cartel, which controls around 40pc of the world’s oil supply.
West Texas Intermediate, the US benchmark for crude oil prices, moved up 3.3 percent to start the day at $31.70 per barrel.
On Wednesday, Canada’s Ministry of Natural Resources spokeswoman Cathy Khoury told Sputnik that the recent deal can be helpful for Canadian producers if it supports higher prices.
Wittner argues, however, that oil prices have been driven not by fundamentals but by external reasons, namely China and emerging markets.
Waning expectations of further US interest rate hikes appear to have halted the greenback’s appreciation against other currencies.
Also, In the event that oil producers cap production, the uncertainty may drive investors with a short position to be skeptical, he said.
LONDON – Oil prices slid on Friday but are set for their first weekly increase in February as talk of a co-ordinated plan by producers to freeze output levels was tempered by a record build in USA crude inventories. Crude stocks rose by 2.1 million barrels to a peak of 504.1 million, data from the USA government’s Energy Information Administration (EIA) showed on Thursday.
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Oil prices rallied on Wednesday and Thursday following the Doha deal, with the Brent crude benchmark reaching its highest level since early January by Thursday noon. While it has peaked at 9.7 million last April, US output hasn’t fallen by as much as expected despite a more than 60 per cent drop in rigs drilling for crude in the US and cuts in capital expenditures by oil companies.
