United Arab Emirates backs oil producers’ output freeze plan

DUBAI, United Arab Emirates (AP) – The United Arab Emirates threw its support on Thursday behind a plan by major oil producers to freeze output levels in an attempt to halt a slide in crude prices that has pushed them to their lowest point in more than a decade.

The sanctions, imposed over Iran’s nuclear program, were lifted last month after an agreement with world powers, allowing Tehran to resume selling oil freely in worldwide markets.

“We believe that freezing production levels by members of OPEC and Russian Federation will have a positive impact on balancing future demand based on the current oversupply”, he said. “The freeze for those people that have been producing to the maximum does not help the market”, one Iranian oil source familiar with discussions told Reuters.

Saudi Arabia and Russian Federation said the global deal to freeze output could become the first step in the right direction to balance the market if all major producers agreed to abide by it.

“Iran has just started boosting production after sanctions were lifted and is unlikely to commit to maintaining output at current low levels”, said ANZ Research. “There is no reason for Iran to do so”.

Iran used to export 2.3 million barrels per day but its crude exports fell to 1 million in 2012.

Iran has previously said it hopes to put another 500,000 barrels a day on the market.

“The rally overnight shows the nervousness of this market, but the agreement does nothing to reduce the flow of oil”, said Stuart Ive, client manager at OM Financial. Afterward, journalists followed him outside.

In comments posted on Twitter, Suhail Al Mazrouei said the UAE’s oil policy was open to cooperation towards the mutual interest of market stability.

Kuwait, another Gulf OPEC member, however signaled it was willing to go along with the Doha plan.

“The market rewards OPEC managing to collect a minimum, even if we still do not know that Iran will agree to” found John Kilduff, of Again Capital.

Anas al-Saleh, who is Kuwait’s deputy premier, finance minister and acting oil minister, said in a statement his country was committed to the proposal if others join in.