Iran snubs Doha proposal, won’t freeze on oil output levels

Oil prices are now back over $31 per barrel – a whole 2% higher than when Iran delivered a more aggressive statement over the production freeze hours earlier. In London, Brent North Sea crude for April delivery rose US$2.32 to US$34.50 a barrel.

On Wednesday, the energy ministers of Venezuela and Qatar, who is also OPEC president, were expected to convince Iran and Iraq to join the agreement during the meeting.

After oil prices rose in the previous session as much 8%, commentators suggested markets had overreacted to Iran’s support for the caps and said the Russian-Saudi move was not likely to reduce the global surplus.

“These countries increased their production by four million barrels when Iran was under sanctions”, Iran’s OPEC envoy Mahdi Asali was quoted as saying by the Shargh daily.

A freeze in production from January’s near-record levels would do little to relieve the glut, analysts said.

Venezuela faces an uphill battle convincing its Iranian counterparts to freeze production, as the Middle Eastern country recently began exporting oil after sanctions were lifted due to a nuclear deal.

“This year we think that oil products refining margins are going to be under pressure as there is too much in the market and demand growth is not as great as last year”, he said.

“Iraq is ready to agree with any decision that serves the drop in oil prices because Iraq is suffering from this sharp drop in oil prices and has lost lots of money” oil ministry spokesman Asim Jihad told The Post.

“I share the consensus view that producers are unlikely to reach an agreement (on cuts), the rationale being the need to satisfy two conditions”, said Ric Spooner, chief market analyst with Sydney’s CMC Markets. Qatar and the Emirates, both oil and gas powerhouses in their own right, also compete with each other in the aviation industry and cultural pursuits.

More than a year since the Organization of Petroleum Exporting Countries decided not to cut production to boost prices, oil remains about 70 percent below its 2014 peak.

Wednesday’s rally got minor support from data from the U.S. Federal Reserve, which in the past said the low price of crude oil may throttle economic momentum. “This is good start”.

Iran has said it will increase its oil production by 500,000 barrels a day after global sanctions were lifted in January under a deal with world powers to curb its nuclear program.

Benchmark U.S. WTI light sweet crude traded 0.77 percent higher just below $30 per barrel before trading opened today. “The market needs a cut, not a production freeze”, PVM analyst David Hufton said.