KUWAIT CITY, April 15, (Agencies): Major oil producers meet this weekend to try to negotiate a production freeze to boost prices, but doubts remain about the likelihood of a deal with Iran refusing to sign up.
Tehran said its oil minister would skip the talks in Doha on Sunday between around a dozen oil exporters, including heavyweights Saudi Arabia and Russia.
Iran’s governor at the OPEC oil cartel will attend instead, it said, triggering a swift drop in oil prices on world markets.
Prices have rebounded sharply in recent weeks partly on expectations of a deal that could, in theory at least, help to reduce a supply glut and repair producers’ battered public finances.
Any agreement to freeze oil production would “likely give prices a further short-term boost,” said Fawad Razaqzada, analyst at brokerage firm City Index.
Tehran, which is emerging from nuclear-related Western sanctions, will be seeking a waiver until its production reaches its pre-embargo levels.
Iranian Oil Minister Bijan Zanganeh will not attend the Doha talks himself, his ministry said Friday
“Iran already announced it cannot join the plan to stabilise oil prices” while its output is still below pre-sanction levels, it added.
OPEC kingpin Saudi Arabia, however, has insisted it will not join an output freeze unless Iran, its regional rival, does so.
“We don’t see Saudi Arabia freezing production and … accommodating significant production rises by other producers,” Fahad al-Turki, head of research at Saudi Jadwa Investment, told AFP.
If a substantive agreement is struck in Doha, however, that would help to build trust between key producers and pave the way for production cuts in the future, Turki said.
Qatar said Thursday there was an “atmosphere of optimism” that a deal would be struck, adding that the number of countries due to attend had risen.
Last month, Qatar said 12 nations including itself would be present at the talks.
The Doha meeting is a follow-up to talks in February between OPEC members Saudi Arabia, Qatar and Venezuela plus Russia in which they first mooted the output freeze.
The Organization of Petroleum Exporting Countries warned ahead of the Sunday talks of worsening oversupply.
OPEC also trimmed its forecast for global oil demand growth this year and said it might have to lower its projection further.
A sharp rise in unconventional oil production, mainly US shale crude, and OPEC’s reluctance to cut output triggered a collapse in oil prices from levels above $100 a barrel in 2014, costing exporters billions of dollars.
After hitting 13-year lows of around $27 a barrel in February, oil prices have since rebounded to above $40.
On Thursday, the International Energy Agency warned against over-expectation for the Doha talks, saying the meeting would have only a “limited” impact on supplies.
OPEC said Wednesday that Iranian oil production in March was 3.3 million bpd, up from 2.9 million in January, but still short of its pre-embargo level of around 4.0 million.
OPEC said its members pumped 32.25 million bpd in March — with Saudi Arabia accounting for nearly a third — up from an average of 31.85 million bpd in 2015.
A freeze agreement, if it includes Iran, could see “markets completely balanced” as early as in the third quarter this year, he added.
One of the main OPEC goals by not cutting production was to drive high-cost supply, mainly US shale oil, out of the market.
US shale production is now sliding but the conventional producers’ dilemma is that shale oil can respond quickly when prices increase.
Meanwhile, Iran’s oil minister will not join an Iranian delegation at a meeting this weekend of major crude producers aimed at negotiating a production freeze, the oil ministry said on Friday.
In a statement carried by the Shana news agency, the ministry said Bijan Zanganeh would skip the talks in Doha, adding that “Iran already announced it cannot join the plan to stabilise oil prices” while its output is still below pre-sanction levels.
The ministry said Iran’s OPEC representative would attend the meeting instead.
Tehran is expected to seek a waiver as it increases output after the lifting of nuclear-related Western sanctions.
OPEC kingpin and regional rival Saudi Arabia has vowed not to join an output freeze unless Iran does the same.
Oil prices, which hit a 13-year low earlier this year, have rebounded sharply in recent weeks partly on expectation that a deal between OPEC and non-OPEC producers in Qatar could help to reduce a global crude supply glut.
OPEC said Wednesday that Iranian oil production in March was 3.3 million barrels per day (bpd), up from 2.9 million in January, but still short of its pre-embargo level of around 4.0 million.
“Iran supports efforts… to stabilise the market and support prices,” oil ministry spokesman Akbar Nematollahi was quoted as saying Friday.
“Iran’s representative will go to Doha to explain the position of Iran and revive efforts to improve the market situation.”