Iran yet to commit to oil output freeze

Russia, Saudi Arabia, Qatar and Venezuela said they were ready to freeze output at January levels as part of a global pact to keep markets from completely drowning in cut-rate barrels and shore up prices.

“Asking Iran to freeze its oil production level is illogical… when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices”.

Oil prices were lifted on Wednesday (Feb 17) by news that Iran entered talks with other major producers to address low prices, although it stopped short of committing itself to any production curbs.

Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar in Tehran for over two hours, after which he welcomed the initiative to set a “ceiling” as a first step towards stabilising the market.

Comments from Saudi Oil Minister Ali Al-Naimi have confirmed that oil output will be frozen at “January levels”. “It could mark the beginning of further cooperation between OPEC and other producers to improve the situation in the oil market”, the Minister said.

Mahony thinks a deal is plausible in which Iran freezes production once it resumes its output at pre-sanction levels. The International Energy Agency has noted that OPEC’s production in January was running 1.7 million barrels a day higher than it did a year earlier. Government sources in Iran said the position has not changed.

But U.S. oil production has only slipped slightly in the face of drastically lower oil prices.

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

However, on Tuesday Saudi Arabia said the deal would depend upon other large producers cooperating.

Oil is down about 21 percent this year on speculation a worldwide surplus will persist amid brimming US crude stockpiles and the outlook for increased Iranian shipments.

Respite may soon come the way of Nigeria and other members of the OPEC as the declaration triggered a jump in crude oil price on Tuesday, with Brent crude blend rising from $31.53 per barrel to about $32.30. Zanganeh didn’t mention if Iran, the second-biggest Opec producer before sanctions were intensified in 2012, would deviate from plans to restore exports after the lifting of penalties last month.

Mahony said the conversion should be centered around a production cut, instead of a freeze – but a reduction in output isn’t likely to happen.