Oil price forcing producers to freeze output – OPEC to meet in Moscow for new talks

This news has been read 5716 times!

ABU DHABI, March 7, (RTRS): The United Arab Emirates’ energy minister said on Monday that current, low oil prices are forcing many producers to freeze output but that a correction in prices would take time.

OPEC leader Saudi Arabia and non-OPEC producer Russia, the world’s two largest oil exporters, agreed last month to freeze output at January levels to prop up prices if other nations agreed to join the first global oil pact in 15 years.

“I believe that the current oil prices are forcing everyone to freeze so I think it is happening as we speak. It doesn’t make any sense for anyone to increase production at the current prices,” Suhail bin Mohammed al-Mazrouei told reporters.

“The majority of the world, 99.8 percent, maybe 99.9 percent, are not going to increase production. To the contrary many producing assets are losing now at the current oil prices … We are seeing a reduction and we will see a reduction in those fields,” he said.

“This is all good news towards balancing the market. We just need to be patient. It’s not happening in weeks or months. Correcting to a sustainable price will take time. I’m still optimistic that before the end of year we will see a correction.”

Front-month Brent crude futures were trading at $39.10 per barrel at 0745 GMT on Monday, up 38 cents from their last settlement and around a third higher than their January low, when prices fell to levels not seen since 2003.

Yet the freeze accord has so far failed to have a dramatic impact on crude prices, partly because OPEC’s third-largest producer Iran plans to steeply raise production after the lifting of international sanctions on the Islamic Republic in January.

Mazrouei declined to comment on Iran’s production plans. He also said he has not received an invitation yet for a meeting between OPEC and other leading oil producers about freezing oil output.

Meanwhile, some members of OPEC plan to meet other oil producers in Russia around March 20 for new talks on an oil output freeze, Nigeria’s petroleum minister said on Thursday, forecasting the meeting would spark a dramatic reaction in crude prices.

Nigeria has been pushing for action by the Organization of the Petroleum Exporting Countries because the slump in oil revenue has undercut its public finances and currency, leaving the government struggling to pay civil servants.

“We’re beginning to see the price of crude inch up very slowly,” minister Emmanuel Ibe Kachikwu told a conference in Abuja. “But if the meeting that we’re scheduling, it should happen in Russia, between the OPEC and non-OPEC producers, happens about March 20, we should see some dramatic price movement.”

“Both the Saudis and the Russians, everybody is coming back to the table,” Kachikwu said. “I think we’re very humbled today to accept that if we get to a price of $50, it will be celebrated. That’s a target that we have.”

The Russian Energy Ministry said it was ready for talks but the date and venue had yet to be agreed. “Currently, various options about the venue and date for the meeting, where measures on oil market stabilisation due to be discussed, are being worked out,” it said in a statement.

This news has been read 5716 times!