Oil Prices Rise Ahead of OPEC Talks With Iran

“Should this happen, we would think that this could be the start of USA production cuts due to low oil prices”, Singapore’s Phillip Futures said in a note.

Iran said it would back any measures to stabilize the markets, but avoided committing to capping its own production.

However, Saudi Arabia and Russian Federation said their agreement Tuesday to freeze output at January levels was conditional on other major producers doing the same.

“Ministers from Iraq, Venezuela arrive today”.

Iran, the Organization of the Petroleum Exporting Countries’ fourth-largest producer, might be offered an exception as it seeks to ramp up production following the removal of sanctions over its nuclear programme last month, said Ildar Davletshin, analyst at Renaissance Capital. Sanctions cut that to around 1.1 million bpd. Oil markets greeted the accord with skepticism, however, in part because current production levels are already high.

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

At the opening of trading yesterday, Brent crude prices had passed $35 per barrel ahead of expectations for a solution at Doha, but dropped by 3 percent to $32.38 per barrel after the announcement that four producers agreed to freeze output at January levels.

Oil prices are down 52% over the past year.

Supplies from OPEC in January stood at almost 1.7 million barrels a day higher compared to past year, according to data from the International Energy Agency. But Iran initially said it won’t stop increasing its exports.

One source said that Iran had returned to the market and needed a special chance but also needs to make calculations.

In this view, a freeze of production is not a “confidence builder” but an admission that despite the historic collapse of oil prices the sovereign producers can not find enough common ground.

“These countries increased their production by 4 million barrels when Iran was under sanctions”, Asali was quoted as saying by Iran’s Shargh daily.

“Freezing the output is against Iran’s national and economic interests, Zanganeh can not accept it”, he said.

Comments from Saudi Oil Minister Ali Al-Naimi have confirmed that oil output will be frozen at “January levels”.

This is the first time since oil prices nose dived that OPEC has tried to cap production.