Oil producers from OPEC and outside the audience are finalizing a plan to go over freezing output in a meeting in Qatar in mid-April, the most recent move in an offer by financially stricken crude exporters to shift the dynamics of an over-supplied market.
Qatar’s oil minister said that countries would meet in the nation’s capital Doha on April 17, without providing details of who would attend. The participation of Iran, the only OPEC member poised to improve supply significantly, is viewed as crucial for the offer to re-balance the marketplace, but the meeting might have to go ahead with no Persian Gulf nation, based on two delegates who asked to not be identified since the talks are private.
Prices have rallied a lot more than 30 per cent since a mid-February proposal by Saudi Arabia, Russia, Venezuela and Qatar to cap oil output and lower a worldwide surplus that had seen prices slump to 12-year lower in January. The summit in April would seek commitments from a wider selection of producers both within and out of doors the Organization of Petroleum Exporting Countries.
Kuwait was the very first other OPEC member to verify it would attend, according to an e-mailed statement from the oil minister. Saudi Oil Minister Ali al-Naimi and the Russian counterpart Alexander Novak, who represent the world’s largest exporters, will talk about the meeting on Wednesday by telephone, one person said. Delegates from four OPEC members said they hadn’t yet received an invite.
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Latest Date
April 17 is the latest inside a series of dates suggested for follow-up talks on the freeze. Nigerian Petroleum Minister Emmanuel Kachikwu said on March 3 that those talks could be held in Russia on March 20. The next day, Russian Energy Minister Novak told state television channel Rossiya 24 that a meeting might take place between March 20 and April 1 in Russia, Doha or Vienna.
The proposed freeze “put a floor under oil prices,” Qatari Oil Minister Mohammad Al-Sada said within an e-mailed statement on Wednesday. “To date, around 15 OPEC and non-OPEC producers, comprising about 73 per cent of global oil output, support this initiative.”
Oil rallied following the Qatari statement, gaining as much 2.2 per cent to US$39.60 a barrel in London.
Iran Increase
There are good reasons to be doubtful the planned freeze can radically alter an oil market that’s fallen victim to some global fight for share of the market, causing stockpiles to increase to some record high. Most significantly, Iran needs to increase production after the end of economic sanctions and has said hello won’t participate in any accord until its output has recovered.
Iran boosted output by 187,800 barrels each day to 3.13 million each day in February, the biggest monthly gain since 1997, OPEC said in the monthly set of Monday.
Brazil will also add more than 100,000 barrels of supply this season and it has shown little curiosity about taking part.
“We’ll now see if OPEC and Russia can freeze the bears in the oil market,” said Olivier Jakob, managing director at consultants Petromatrix GmbH. “The value of the agreement is that it could take away the perception that OPEC is fighting for share of the market.”
Other forces have driven prices higher in recent weeks. Outages from Iraq and Nigeria have disrupted more than 800,000 barrels a day of supply and tightened the Brent market, according to Citigroup Inc. And falling drilling activity within the U.S. shale industry has seen analysts raise forecasts for declines in United states production.
One key question is how fast shale production could come back if OPEC plus some non-OPEC producers flourish in driving prices higher.
“It’s not surprising they’d be prepared to agree to this because the outlook for any further production increase was quite limited,” Jeff Currie, global head of commodities research at Goldman Sachs Group Inc., said in an interview on Bloomberg Television. “You can’t operate a cartel the way you used to.”
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