Saudis, Russia Agree to Freeze Oil Output; Iran Still Resists

nbcnews.com ^ | Feb 16 2016, 9:34 am ET | Reuters

[Trumpinator]

Saudis, Russia Agree to Freeze Oil Output; Iran Still Resists

by Reuters

Feb 16 2016, 9:34 am ET

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. "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.

Oil prices jumped to $35.55 per barrel after the news about the secret meeting but later pared gains to trade below $34 on concerns that Iran may reject the deal.

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.

[Trumpinator]

Why would Iran not want to freeze output? It would drive up price for balance they do produce offsetting loss in market share. Any oil market people care to comment?

[Army Air Corps]

Ping.

[Steely Tom]

Saudis, Russia Agree to Freeze Oil Output; Iran Still Resists

Both of them are absolutely addicted to petro-revenue.

[PAR35]

Now that the embargo is over, Iran is trying to increase, not just maintain, market share. They reportedly built up a stockpile waiting for the embargo to go away,so they have a glut ready to ship that’s already been pumped.

[Cowboy Bob]

I would say that they are trying to negotiate a smaller production cut for themselves.

[PGR88]

I suppose in some way, this is what the proxy-war in Syria was all about.

The Saudis, Turks and by tacit approval, the US Government, couldn’t destroy the Russian economy by tanking oil prices, and then couldn’t pry Syria out of its alliance to Russia and Iran.

So having lost twice, they probably assume its better to negotiate.

[DoughtyOne]

[riverdawg]

Turkey produces very little oil (It’s barely in the top-60 producing countries) and its production peaked 20 years ago. There have apparently been some new oil discoveries near its border with Iraq, but it consumes more than 20 times what it now produces.

[justa-hairyape]

Or both the Sauds and Russians view oil stocks as a national strategic asset now. You can guess why. See the Battle of the Bulge.

[JudgemAll]

I think Iran wants it both ways: high prices due to OPEC squeezing but high production for themselves only. It obviously is a totalitarian imperialistic maneuver, similar a benefit as a sort of Affirmative Action program for Iran oil, something Obama as a lover of imperialism in those regions is fond of.

[familyop]

"Saudis, Russia Agree to Freeze Oil Output; Iran Still Resists"

It's sponsored propaganda. Within the past few months, Iran told western diplomats that production would be increased there, but I suspect that it's unlikely that Iran made such a promise during the meeting between the Saudis and Russians. And BTW, Iran cannot increase production by much and has been selling oil all along to the more eastern nations.

And consumption will surpass the current production level very soon.

[familyop]

"...a major sticking point with Iran absent from the talks and determined to raise production."

There it is. See? It was long before the meeting between the Russians and Saudis, that Iran said that production there would increase. It's highly likely that British diplomats are working fervently on the Iranians to hold them to that promise after the meeting.

We can also be sure that certain investment interests plan to get their favorite upscale clients back into oil before others do and will keep prices as low as possible until then. They would probably also like to see much cheap fuel consumption and tourism in the States this summer to keep the debt regime going a little longer.

[familyop]

See?

Saudi Oil Minister Signals More Action May Follow Output Freeze
http://www.bloomberg.com/news/articles/2016-02-16/saudi-oil-minister-signals-more-action-may-follow-output-freeze

Posting of content from Bloomberg is not allowed, but there is the title and link. It’s doubtful that Iran will generally oppose an OPEC effort to agree on limits, which Iran was asking for not long ago. Granted, western diplomats are most likely trying to influence Iran toward lower oil prices, but Iran was most in favor and obviously most in need of higher prices in OPEC talks a few months ago. Iran’s break-even price is very high.