Oil prices rise on Iran talks with other producers

Russia’s energy minister, Alexander Novak, said, Tuesday, Feb. 16, 2016, that it has agreed with Saudi Arabia, Qatar and Venezuela to freeze oil production at January 2016 levels if other producers do the same following a closed-door meeting in the Doha, Qatar.
Mehdi Asali, quoted in the Iranian newspaper, Shargh, said Iran will continue to increase oil production until it reaches pre-sanction levels.

The OPEC member country said it would resist any plan to keep its oil output at January levels, adding that it would regain its market share before any "freezing" could take place.

"If the freeze in production rates reduces global oil supplies on the market, this will support higher prices and could help to mitigate the pressure now facing Canadian producers", Khoury said. Venezuelan Oil Minister Eulogio Del Pino, Iraqi Oil Minister Adel Abdel Mahdi and Qatari Energy Minister Mohammad bin Saleh al-Sada were due to begin talks in Tehran with their Iranian counterpart Bijan Zanganeh at 2 p.m. (1030 GMT).

Paul Stevens from the Royal Institute of International Affairs at Chatham House and an expert on the oil markets, said: "Before sanctions in 2012, Iran was producing around 4.4 million barrels a day".

An agreement to freeze oil production by the Organization of Petroleum Exporting Countries, of which Venezuela is a member, would be crucial for its economy.

"It is a positive step in the right direction in a transition period", said a Persian Gulf oil official on the condition of anonymity on Tuesday.

Oversupply and sluggish demand in the market have cause oil prices to plummet to 13-year-old lows this year, after hitting record highs of around $115 per barrel in June 2014.

"Iran's position as for this issue is very clear".

"This decision of [top oil producers] to freeze production is a publicity stunt more than anything", said Josh Mahony, a market analyst with IG, based in London.

Until now it has vowed to pump a million barrels of oil a day to play catch-up with rivals following the recent lifting of sanctions, as it had previously had it's oil exports cut.

At the opening of trading yesterday, Brent crude prices had passed $35 per barrel ahead of expectations for a solution at Doha, but dropped by 3 percent to $32.38 per barrel after the announcement that four producers agreed to freeze output at January levels.

It is hard to see what incentives the others could offer Iran to freeze its output, and as long as Tehran is not part of the deal it is meaningless. For months as oil prices plung Riyadh had refused to curb its production in an attempt to force other oil producers especially USA shale oil producers out of the market.

"Saudi Arabia is paying lip service to Venezuela's efforts after they pushed so intensively", said Tchilinguirian.