By Rania El Gamal and Tom Finn
DOHA
(Reuters) - Top oil exporters Russia and Saudi Arabia agreed on Tuesday
to freeze output levels but said the deal was contingent on other
producers joining in - a major sticking point with Iran absent from the
talks and determined to raise production.
The
Saudi, Russian, Qatari and Venezuelan oil ministers announced the
proposal after a previously undisclosed meeting in Doha. It could become
the first joint OPEC and non-OPEC deal in 15 years, aimed at tackling a
growing oversupply of crude and helping prices recover from their
lowest in over a decade.
Saudi
Oil Minister Ali al-Naimi said freezing production at January levels -
near record highs - was an adequate measure and he hoped other producers
would adopt the plan. Venezuelan Oil Minister Eulogio Del Pino said
more talks would take place with Iran and Iraq on Wednesday in Tehran.
"The
reason we agreed to a potential freeze of production is simple: it is
the beginning of a process which we will assess in the next few months
and decide if we need other steps to stabilize and improve the market,"
Naimi told reporters.
"We
don't want significant gyrations in prices, we don't want reduction in
supply, we want to meet demand, we want a stable oil price. We have to
take a step at a time," he said.
Oil
prices jumped to $35.55 per barrel after the news about the secret
meeting but later pared gains to trade near $33 on concerns that Iran
may reject the deal and that even if Tehran agreed it would not help
ease the growing global glut. [O/R]
OPEC
member Iran, Saudi Arabia's regional arch rival, has pledged to steeply
increase output in the coming months as it looks to regain market share
lost after years of international sanctions, which were lifted in
January following a deal with world powers over its nuclear program.
"Our
situation is totally different to those countries that have been
producing at high levels for the past few years," a senior source
familiar with Iran's thinking told Reuters.
Iranian
Oil Minister Bijan Zanganeh also indicated Tehran would not agree to
freezing its output at January levels, saying the country would not give
up its appropriate share of the global oil market.
SPECIAL TERMS
The
fact that output from OPEC kingpin Saudi Arabia and non-OPEC Russia -
the world's two top producers and exporters - is near record highs
complicates any agreement since Iran is producing at least 1 million
barrels per day below its capacity and pre-sanctions levels.
However,
two non-Iranian sources close to OPEC discussions told Reuters that
Iran may be offered special terms as part of the output freeze deal.
"Iran is returning to the market and needs to be given a special chance
but it also needs to make some calculations," said one source.
Russian
Deputy Prime Minister Arkady Dvorkovich said freezing output was not a
problem for his country as he anyway expected its production to be flat
this year versus 2015.
An Iraqi oil ministry source said Baghdad was also happy to freeze production if all parties agreed.
"The
agreement (if successful) should support oil prices but there are
reasons to be cautious. Not all OPEC members have signed up to the deal -
notably Iran and Iraq. History would also suggest that compliance may
be an issue," said Capital Economics' analyst Jason Tuvey.
OPEC
has been quarrelling for decades over output levels and Russia, which
last agreed to cooperate with OPEC back in 2001, never followed through
on its pledge and raised exports instead.
Also
complicating any potential agreement is the geo-political rivalry in
the Middle East between Sunni Muslim power Saudi Arabia and Shi'ite
Iran. Saudi Arabia and its Gulf allies are fighting proxy conflicts with
Russia and Iran in the region, including in Syria and Yemen.
In
Syria's five-year-old civil war, Riyadh politically and financially
backs some rebel groups battling President Bashar al-Assad's government,
which has gained the upper hand with the help of Russian warplanes and
Iranian-backed Shi'ite militias.
RUSSIAN BUDGET
The
Doha meeting came after more than 18 months of declining oil prices,
knocking crude below $30 a barrel for the first time in over a decade
from as high as $115 a barrel in mid-2014.
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