Saudi Arabia and Russia agree to freeze oil output

February 16, 2016 3:40 pm


In a major move, top four oil producers agreed to freeze output in a meeting in Doha on Tuesday (February 16).

Saudi Arabia, Russia, Qatar and Venezuela would freeze production at January levels to stop the oil price from falling further.

“Freezing now at the January level is adequate for the market,” said Saudi Arabia’s oil minister Ali al-Naimi. He also hoped producers both inside the OPEC cartel and outside it would adopt the proposal.

“The reason we agreed to a potential freeze of production is simple: it is the beginning of a process which we will assess in the next few months and decide if we need other steps to stabilise and improve the market,” Naimi told reporters.

“We don’t want significant gyrations in prices; we don’t want reduction in supply. We want to meet demand; we want a stable oil price. We have to take a step at a time,” he said.

Venezuela’s Oil Minister Eulogio Del Pino said more talks would take place with Iran and Iraq on Wednesday in Tehran.

Iran has pledged to steeply increase output in the coming months as it looks to regain the market share it lost after years of international sanctions, which were lifted in January following a deal with world powers over its nuclear programme.

Iraq also has said earlier that it expected its production to rise further this year but it said last month that it was ready reduce its fast-growing output if all OPEC and non-OPEC members agreed.

“We think other producers need to freeze straight away, including Iran and Iraq. We believe this step is meant to stabilise the market,” said Qatar’s oil minister Mohammed al-Sada.

Oil prices jumped to $35.55 per barrel after the news about the secret meeting, but later pared gains to trade below $34 as expectations for an immediate deal faded.

Oil has lost more than 70 per cent of its value in 18 months, with crude falling below $30 a barrel for the first time in more than a decade from as high as $115 a barrel in mid-2014.

($1 = AED3.67, at the time of publishing)

(With inputs from Reuters)

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By Mujeeb Rahman