Meeting on oil freeze unlikely

The pact on freezing output has helped support oil prices, which started a slide in mid-2014 because of oversupply. Photo / Bloomberg
The pact on freezing output has helped support oil prices, which started a slide in mid-2014 because of oversupply. Photo / Bloomberg

A meeting of oil producers to discuss a global pact on freezing production is unlikely to take place in Russia on March 20, inside sources say, as Opec member Iran is yet to say whether it would participate in such a deal.

Opec officials including Nigeria's oil minister have said a meeting would take place in Moscow on that date, potentially as the next step in widening an agreement to freeze output at January levels struck by Opec members Saudi Arabia, Venezuela and Qatar plus non-member Russia last month.

But the biggest block to a wider deal, Opec delegates say, is Iran. Tehran feels it should be exempt as it wants to recover market share it lost under Western sanctions. Kuwait said this week it would agree to the deal if all major producers including Iran did so.

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"Only if Iran agrees will things change," said an Opec source from a major producer.

The pact on freezing output has helped support oil prices, which started a slide in mid-2014 because of oversupply. Brent crude was trading above US$40 a barrel yesterday, up 50 per cent from a 12-year low of US$27.10 reached in January.

Some delegates are wary that if many oil producers meet too soon before getting the nod from everyone, prices could weaken again if the talks ended in disarray.

Opec's Gulf members favour meeting in the first half of April, in Doha or another Gulf city, according to a Gulf delegate last week.

Only if Iran agrees will things change.

Tehran has rejected freezing its output at January levels, put by Opec sources at 2.93 million barrels per day (bpd), and wants to return to much higher pre-sanctions levels.

Tehran wanted a freeze based on four million barrels a day, its pre-sanctions production figure, said sources familiar with the discussions.

The issue is set to be discussed when Russian Energy Minister Alexander Novak visits Tehran on Monday. AAP

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