Oil Freeze Agreement, Iran Differs
Saudi Arabia, Qatar, Russia and Venezuela, have agreed on Tuesday to spearhead a plan that will lead to a freeze in oil output at January levels but refrain from revealing a cut in production of crude oil.
Iran, which is a major oil producer has rapidly withdrawn from the deal noting that it would not tone down its share in the crude oil market, while Iraq has shown willingness to tag along if a pact was reached among non-OPEC and OPEC members.
Producers are billed to meet with Iran and Iraq on Wednesday and significant doubts by Iran to place a freeze on its output is expected to hold sway at the meeting. Iran has already made it clear that it has no intention of freezing its production in a bid to put a cap on production in its determinations to recover market share after years of prolong sanctions.
An anonymous source noted that, “Iran has its own model and the meeting is taking place in Iran. Iran is returning to the market and needs to be given a special chance but it also needs to make some calculations.”
Oil producing nations have given a nod to having actions that would forestall lower energy prices and are beginning to harmonize the $25.00 level as a longer term low. This harmonized move is important in that it is the first action by any of the member/non-member oil producing states to free production in any amount. Saudi Arabia has stated before now that while it would be keen on slashing supply, but that this would only be shrinking its own market share with no corresponding effect on price.