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Opec and Russia oil production freeze is meaningless gesture, says IEA | |
(35 minutes later) | |
A deal among some Opec producers and Russia to freeze production is perhaps “meaningless” as Saudi Arabia is the only country with the ability to increase output, according to a senior International Energy Agency (IEA) executive. | A deal among some Opec producers and Russia to freeze production is perhaps “meaningless” as Saudi Arabia is the only country with the ability to increase output, according to a senior International Energy Agency (IEA) executive. |
Brent crude futures are up more than 50% from a 12-year low near $27 a barrel hit early this year, bouncing back after Russia and Opec’s Saudi Arabia, Venezuela and Qatar struck an agreement last month to keep output at January levels. | Brent crude futures are up more than 50% from a 12-year low near $27 a barrel hit early this year, bouncing back after Russia and Opec’s Saudi Arabia, Venezuela and Qatar struck an agreement last month to keep output at January levels. |
Qatar has invited all 13 members of the Organisation of the Petroleum Exporting Countries (Opec) and major non-Opec producers to Doha on 17 April for another round of talks to widen the production freeze deal. | |
“Amongst the group of countries [participating in the meeting] that we’re aware of, only Saudi Arabia has any ability to increase its production,” said Neil Atkinson, head of the IEA’s oil industry and markets division, at an industry event. | “Amongst the group of countries [participating in the meeting] that we’re aware of, only Saudi Arabia has any ability to increase its production,” said Neil Atkinson, head of the IEA’s oil industry and markets division, at an industry event. |
“So a freeze on production is perhaps rather meaningless. It’s more some kind of gesture which perhaps is aimed … to build confidence that there will be stability in oil prices.” | |
Libya has joined Iran in snubbing the initiative, and the absence of the two Opec producers – both with ample room to increase output – would limit the impact of any success in broadening the freeze at the April meeting. | |
The rise in output from Iran in the first quarter post-sanctions has been in line with IEA’s expectation of 300,000 barrels a day (bpd), Atkinson said, adding that Tehran’s output could rise again by the same amount by the third quarter. | The rise in output from Iran in the first quarter post-sanctions has been in line with IEA’s expectation of 300,000 barrels a day (bpd), Atkinson said, adding that Tehran’s output could rise again by the same amount by the third quarter. |
“Iran has not exactly been flooding the market with lots more oil. It seems to be far more measured,” Atkinson said. | “Iran has not exactly been flooding the market with lots more oil. It seems to be far more measured,” Atkinson said. |
It will take a while for Iran to regain its pre-sanctions share in Europe, where markets have been taken over by Saudi Arabia, Russia and Iraq, he added. | It will take a while for Iran to regain its pre-sanctions share in Europe, where markets have been taken over by Saudi Arabia, Russia and Iraq, he added. |
The IEA, energy watchdog for the Organisation for Economic Co-operation and Development (OECD), expects the wide gap between supply and demand to narrow later this year, paving the way for an oil price recovery in 2017. | The IEA, energy watchdog for the Organisation for Economic Co-operation and Development (OECD), expects the wide gap between supply and demand to narrow later this year, paving the way for an oil price recovery in 2017. |
“We think the worst is over for prices … Today’s prices may not be sustainable at exactly $40 a barrel, but in this mid-$30s and upward range, we think there will be some support unless there’s a major change in fundamentals,” Atkinson said. |
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