Oil producers mull output freeze in Doha

Oil producers mull output freeze in Doha

April 18, 2016
Saudi Oil Minister Ali Al-Naimi, center right, arrives at an oil-producers' meeting in Doha on Sunday. — AP
Saudi Oil Minister Ali Al-Naimi, center right, arrives at an oil-producers' meeting in Doha on Sunday. — AP

Doha — Major oil producers gathered in Qatar on Sunday for crucial talks on capping production to boost prices, despite Iran’s refusal to take part.

Top energy officials from some 15 countries including Saudi Arabia and Russia were at the Doha talks, amid reports a draft agreement was in the works to freeze output at January levels until at least October.

Major producers both inside and outside the Organization of the Petroleum Exporting Countries (OPEC) are anxious to stem a market nosedive that has cost exporters billions in lost revenue.

From above $100 in mid-2014, oil prices dropped to 13-year lows of around $27 in February due to a supply glut, though they have since rebounded to about $40.

Officials held “consultations” in the morning and delayed the official start of the meeting from 0600 GMT to the afternoon, a member of the Ecuadorian delegation told reporters, declining to provide details. Other officials confirmed the delay.

Ecuadoran Hydrocarbons Minister Carlos Pareja told reporters that his country would support a plan to freeze output until at least October.

He said proposals under discussion also call for “setting up a committee to monitor the freeze,” but provided no further details.

Pareja warned that if no action were taken “there will be huge damage to the oil industry.”

Russia’s RIA Novosti news agency also quoted Azerbaijani Energy Minister Natiq Aliyev as saying the draft included the output freeze at January levels until October.

The meeting in Doha 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.

Saudi Arabia has insisted that all major producers must be on board for the freeze to work.

But Tehran, which has boosted production following the lifting of sanctions under its nuclear deal with world powers, has rejected any talk of a freeze.

Iran had initially said its OPEC representative would participate in the talks but on Sunday Oil Minister Bijan Zanganeh announced Tehran would send no delegation at all.

Deputy Crown Prince Muhammad Bin Salman, second deputy premier and minister of defense, reiterated in an interview with Bloomberg published on Saturday that the Kingdom would not accept a freeze without Tehran’s cooperation.

OPEC said on 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.

Saudi Arabia has refused to cut production despite the price fall.
Host country Qatar said “an atmosphere of optimism” spread on the eve of the meeting.

Kuwait’s acting oil minister Anas Al-Saleh told reporters on arrival in Doha that “he was optimistic” about the success of the conference.

Still, oil prices had tumbled on Friday as traders bet that the meeting in Doha will yield no effective measures to curb the global oversupply.

April 18, 2016