Iran Starts Talks on Oil Output Levels

Asali said the fall in oil prices should be blamed on oversupply and that it was up to Saudi Arabia and others to cut down production to boost oil prices.

Benchmark Brent futures prices LCOc1 rose by almost 5 percent from Tuesday’s close to above $34 a barrel by 1615 GMT (11:15 a.m. EST)following the Tehran talks.

“As these countries produced more than their quota and more than the OPEC official ceiling of 30 million barrels, which they had agreed on, the price collapsed and so now the responsibility to bring back balance to the oil market is mainly on these countries”, he told the Shargh daily.

According to Reuters, talks in Tehran between Bijan Zanganeh, Iranian oil minister, and his counterparts from Iraq, Qatar and Venezuela began on Wednesday. “After fighting to end sanctions for years and finally being free of them, why Iran would choose to put sanctions on themselves by freezing their production?”

Analysts envision that the big challenge would be mobilising other oil producing countries, including Iran, to also agree to cut their production.

“The market needs a cut, not a production freeze”, PVM analyst David Hufton said.

The Doha accord was likely a token gesture from Saudi Arabia to Venezuela, which faces “deep financial pain” from oil’s slump and has lobbied hard for any agreement that will support prices, Tchilinguirian said.

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”.

Prices have come under renewed pressure from Iran’s return to world markets after the lifting last month of worldwide sanctions linked to its nuclear programme.

Russia, Saudi Arabia, Qatar and Venezuela are ready to freeze oil production at January’s level if other producers do the same. However, the freeze in oil production hardly solves the problem of oversupply which is a major determinant of the global oil prices.

The four countries made their announcement following an unexpected meeting in the Qatari capital of Doha that pointedly did not include Iran.

Iran has signaled on Wednesday that it would be taking a tough stance in the discussions amongst oil producers on restraining their production, saying it would continue to increase its output until levels were reached from before the global sanctions had been imposed.

Investors are also eyeing USA oil inventory data later on Wednesday and on Thursday for further direction on prices, with a poll of analysts suggesting a gain of 3.9 million barrels in crude oil stocks last week.