Oil prices rise as Iran backs output cap; UAE expects positive impact

“We welcome cooperation between OPEC and non-OPEC (producers)”. Those hopes were dashed when Russian Federation and Saudi Arabia agreed to freeze output at January’s levels instead.

Oil is still down 16% this year after the Organization of Petroleum Exporting Countries effectively abandoned output targets in early December and as USA crude inventories swelled to the highest level since 1930. Oil prices were high, when the sanctions were imposed on Iran.

As for itself, Iran will continue to ramp up oil production.

The nation produced 9.3 million barrels a day in November, according to the most recent figures from the Energy Information Administration.

The closely-watched announcement came a day after four of the world’s biggest oil producers presented a surprise deal following a closed-door meeting in Doha. “After fighting to end sanctions for years and finally being free of them, why would Iran choose to put sanctions on themselves by freezing their production?”

This morning, the energy ministers of Venezuela, Iran, Iraq and OPEC president Qatar met in Tehran to convince both Iran and Iraq to agree to the freeze.

Oil ministers from the OPEC (Organisation of Petroleum Exporting Countries) held discussions in Tehran Wednesday to talk about a possible production freeze between global Oil producers.

By merely capping supply rather than cutting it, the deal wouldn’t succeed in tackling the global oil glut, Goldman Sachs Group and BNP Paribas said.

“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.

Following a meeting with OPEC ministers, the Iranian oil minister Bijan Zanganeh told the state news agency Shana, cited by various media outlets including The Financial Times, that “Iran backs any measures which help stabilise the market and improve the price of crude oil”.

“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.

Venezuela, Russia, Saudi Arabia and Qatar on Tuesday agreed to freeze production, after Venezuela unsuccessfully sought a cut in production among OPEC members.

As the Iran nuclear agreement took effect last month, the sanctions were lifted and Iran says that within the next six to 12 months it intends to send another million barrels of oil a day onto the world market.