S. Arabia, Russia to freeze oil output

Saudi Arabia and Russia agreed to freeze oil output, which is already at near-record levels. This is the first coordinated move by the world’s two largest producers to counter a slump that has pummeled economies, markets and companies.

According to Bloomberg, it’s the first significant cooperation between OPEC and non-OPEC producers in 15 years and Saudi Arabia said it’s open to further action.

Oil pared gains after the accord was announced, signaling traders see no immediate end to the global supply glut.

The deal to fix production at January levels, which includes Qatar and Venezuela, is the “beginning of a process” that could require “other steps to stabilize and improve the market,” Saudi Oil Minister Ali Al-Naimi said in Doha Tuesday after the talks with Russian Energy Minster Alexander Novak.

Qatar and Venezuela also agreed to participate, he said.

Saudi Arabia has resisted making any cuts in output to boost prices from a 12-year low, arguing that it would simply be losing market share unless its rivals also agreed to reduce supplies.

Naimi’s comments may continue to feed speculation that the world’s biggest oil producers will take action to revive prices.

“The reason we agreed to a potential freeze of production is simply the beginning of a process” over the next few months, Naimi told reporters.

“We don’t want significant gyrations in prices. We don’t want a reduction in supply. We want to meet demand. We want a stable oil price.”

**Prices Fall

More than a year since the Organization of Petroleum Exporting Countries decided not to cut production, oil remains about 70 percent below its 2014 peak, hovering around $140 a barrel.

Supply still exceeds demand and record global oil stockpiles continue to swell, potentially pushing prices below $20 a barrel before the rout is over, Goldman Sachs Group Inc. said last week.

While Novak has said he could consider cuts if other countries joined in, Russia faces significant obstacles to doing so. The freeze is conditional on other nations agreeing to participate, Russia’s Energy Ministry said in a statement.

The group of producers plans to monitor output and prices for four months, Venezuelan Oil Minister Eulogio Del Pino said in an e-mailed statement.

“This is an announcement of a production freeze among countries whose production didn’t even grow recently,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

Oil erased gains in London after rising before the meeting amid speculation the countries would discuss production cuts. Brent crude fell 3.6 percent to settle at $32.18 a barrel Tuesday in London, having earlier climbed as much as 6.5 percent.

Golrokh Askarieh

Recent Posts

Tehran Cyber Police shut down 40 Instagram accounts of harassers

Tehran’s Cyber Police Chief, Brigadier General Davood Moazzami Goudarzi, announced a crackdown on individuals causing…

21 minutes ago

Qatar warns may stop gas shipments to EU amid Russia-Ukraine war

Doha will stop gas shipments to the EU if member states enforce new legislation on…

36 minutes ago

UK armed forces struggling for recruits: Telegraph

At least 15,000 British soldiers left the country's Armed Forces between November 2023 and October…

47 minutes ago

Nearly 85k Russian soldiers killed in Ukraine: Report

Journalists have identified the names of 84,761 Russian soldiers who died during the war in…

4 hours ago

US downs own warplane while bombing Yemen: Pentagon

The United States Navy has inadvertently shot down its own F/A-18 fighter jet in a…

5 hours ago

China brands US as ‘war-addicted’

China’s Defense Ministry has accused the Pentagon of fabricating false narratives and twisting reality in…

5 hours ago