Qatar Today - - BUSINESS > OIL & GAS -

Rus­sia and Saudi Ara­bia, the world's largest oil pro­duc­ers, have agreed to freeze pro­duc­tion at Jan­uary lev­els in a bid to pre­vent fur­ther de­clines in prices, which scraped 12-year lows last month.

At a closed-door meet­ing in Doha, which also in­cluded min­is­ters from Qatar and Venezuela, Saudi oil min­is­ter Ali Al Naimi agreed to end the OPEC pol­icy of un­re­stricted pump­ing, which has sent prices plum­met­ing to be­low $30 a bar­rel since June 2014 highs of $110. The Or­gan­i­sa­tion of Petroleum Ex­port­ing Coun­tries' Jan­uary out­put, at 33.1 mil­lion bar­rels a day, was its high­est ever, mean­ing that any im­pact on the oil price from the freeze is likely to be small. Rus­sia, which is not a mem­ber of OPEC, pro­duced 10.9 mil­lion bar­rels a day that month, its high­est level in his­tory.

But the move rep­re­sents a shift away from the pol­icy adopted at OPEC's De­cem­ber meet­ing, when the group scrapped pro­duc­tion caps al­to­gether. “Freez­ing now at the Jan­uary level is ad­e­quate for the mar­ket, we be­lieve,” said Al Naimi. “We recog­nise to­day the sup­ply is go­ing down be­cause of cur­rent prices. We also recog­nise that de­mand is on the rise.”

“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,” he said.

The oil min­is­ters of four coun­tries said that the deal would de­pend on other oil pro­duc­ers, in­clud­ing Iran, also agree­ing to freeze pro­duc­tion. Sanc­tions on Iran ended in early Jan­uary, al­low­ing the coun­try to ramp up oil pro­duc­tion. Bi­jan Nam­dar Za­ganeh, Iran's oil min­is­ter, has re­peat­edly in­sisted that it does not in­tend to cut pro­duc­tion, as the coun­try seeks to use rev­enue from sales to lift its econ­omy out of re­ces­sion.

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