Among OPEC members, a tentative offer to freeze oil output

Oil prices would likely remain volatile, Spooner said, as traders and investors reacted to news and rumors about curbs on output growth and possible cuts in production. One of the flaws in the oil deal, is the fact that Saudi Arabia and its allies have chosen to freeze production at January levels which were already high. He said production could go as high as 15 million to 20 million barrels a day in coming years.

Iran just had its sanctions lifted and wants to win back the market share it lost to Saudi Arabia and other countries while under export sanctions.

“The price rebound looks like an overreaction as the probability of Iran not increasing production is still low in our view”, ANZ said in a note on Thursday.

Iran’s envoy to the Organization of the Petroleum Exporting Countries, Mahdi Asali, said Tehran intends to step up exports until they reach the level it had before worldwide economic sanctions were imposed on it in an effort to force Iran to agree to a ban on its suspected development of nuclear weaponry.

“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?”

According to Reuters, talks in Tehran between Bijan Zanganeh, Iranian oil minister, and his counterparts from Iraq, Qatar and Venezuela began on Wednesday.

Initial signs are that Iran is unlikely to budge, having committed to a significant ramp-up of production since global sanctions were lifted last month.

Jason Tuvey, Middle East economist at Capital Economics, said Tuesday’s agreement should help support prices.

United States benchmark West Texas Intermediate for March delivery advanced US$1.62 to US$30.66 a barrel on the New York Mercantile Exchange.

On Tuesday, the world’s largest oil producers, Saudi Arabia and Russian Federation, joined by Qatar and Venezuela, agreed to freeze – but not cut – oil output at January’s levels.

Iran said Wednesday that it would be great if other countries would limit their oil production to boost prices.

“OPEC’s greed has played a part in this painful decline and the visible conflict of interest between OPEC and non-OPEC members suggests that low oil prices may be the theme for an extended period”, he added.

The drop in the oil price has eroded the finances of even the more affluent oil-producing nations, forcing governments to cut spending, increase deficit forecasts, borrow more and push through politically unpopular reforms. “I think Saudi Araba has a plan and they’re sticking to it”, he said.