Iran agrees to freeze oil production

SINGAPORE (Reuters) – Oil prices fell, reversing gains earlier in the session, on signs that Iran will not join in a deal between Saudi Arabia, Russia and other producers to freeze oil output at January levels, keeping the current oversupply in place.

“There is no point in expecting yet another reduction of production level by Iran”, Mahdi Asali was quoted as saying by the Iranian Shargh newspaper.

Speaking before Wednesday’s meeting in Tehran with his counterparts from Iraq, Qatar and Venezuela, Iranian Oil Minister Bijan Namdar Zanganeh said: “What is important is that first of all, there is an excess of supply on the market and secondly Iran will not give up its share of production”.

Meanwhile, Iran has vowed to gradually increase its oil production this year by about half a million barrels a day, taking advantage of export opportunities now that global sanctions on its petroleum sector have been eased as part of the accord limiting its nuclear program.

Under the proposal to freeze production, major producers including Russian Federation and Saudi Arabia would restrict output at January levels.

“Industrial production increased 0.9 percent in January after decreasing 0.7 percent in December”, the Fed said.

But after hitting 2003 lows beneath $30 last week, prices reversed course, surging about 12 percent on Friday alone after the United Arab Emirates said OPEC was ready to cooperate in bringing production down.

On Tuesday, oil ministers from Russia, Saudi Arabia, Venezuela and Qatar announced that they had agreed at a meeting in Doha to maintain oil production at January levels.

The agreement came after a meeting in Doha on Tuesday.

Markets were flush with excitement at the prospect of an agreement which would not only bring some much-needed stability to the volatile commodities market, but also mark the first joint OPEC and non-OPEC deal in 15 years.

“Iran has made it clear it will not consider any freeze or cut until it returns to its pre-sanction levels”, consulting firm Wood Mackenzie said in a statement.

Iran, which was the second-biggest producer in Opec before sanctions were intensified in 2012, is seeking to boost output by one million barrels a day and regain market share.

Brent oil futures rose 3 percent on Wednesday after losing as much as 4 percent the day before. According to the Vice President of Energy Research, Jackie Forrest, the path to a balanced oil market by the end of the year, is the continuous demand for oil; Iran brings a limited amount of production to the market; and its earnings are offset by production cuts in the rest of the world.