Oil prices extend gains as Iran welcomes output freeze

“Asking Iran to freeze its oil production level is illogical… when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices”, Asali said.

On Tuesday, those two countries, along with Qatar and Venezuela, agreed to freeze their oil output at January levels. After years of sanctions, the oil-rich country wants to ramp up its production and pump yet more oil into the already over-supplied market.

Asali’s comments came as Iran’s oil minister was expected to hold three-way, closed-door talks in Tehran with his counterparts from Iraq and Venezuela.

Iran’s IRNA news agency said on Sunday the country had exported its first crude shipment to Europe since it reached a landmark deal past year with world powers.

Iran has vowed to increase oil production this year by about half a million barrels a day, after global sanctions on its petroleum sector have been eased as part of the accord limiting its nuclear program. They agreed to act only if other producers made similar freezes.

Since then, Iran has increased production by 80,000 barrels a day to 2.99 million, the IEA says.

He said, “We had a good meeting today and the report of yesterday’s meeting was given to us; we support cooperation between OPEC and non-OPEC members”. On the New York Mercantile Exchange, West Texas Intermediate crude oil gained $1.62, or 5.6 percent, to settle at $30.66 a barrel.

Oil’s rise encourage both stock markets and the Canadian dollar, which was up three quarters of a cent at 72.92 cents U.S. at mid-afternoon, after rising to 73.15 cents USA earlier in the day.

US crude jumped $1.06 shortly after Asian markets opened, and was trading up 77 cents at $31.43 a barrel as of 6.46 p.m. ET, up 2.5 percent.

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

Many believe that the fact that major OPEC producers such as Saudi Arabia have refused to cut production would kill US production by driving down prices and forcing some producers out of business.

On Tuesday, Iran’s oil minister said it had no intention of giving up its share of the market.

Still, the Iranian oil minister on Wednesday indicated that Tehran may budge – at some point – saying “this is the first step and other steps should also be taken”. “Iran is returning to the market and needs to be given a special chance, but it also needs to make some calculations”, said one source. Some analysts noted that freezing its production at current levels was not a large concession because Iraq is now producing at near record levels.