Oil falls despite Saudi-Russian deal

A pumpjack in the oil town of Midland, Texas.Cast copyright Getty Images

Oil prices fell on Tuesday despite Saudi Arabia and Russia allowing to freeze oil output at January levels if other producers follow jacket.

The announcement came after ministers from the two nations met in Doha along with their counter rts from Venezuela and Qatar.

Brent rough, which had risen more than 5% earlier, fell 2% to $32.77 a barrel, while US original was down 2.3% at $29.03.

Oil prices have sunk from their up to date peak of about $116 in June 2014.

Saudi Arabian oil minister Ali al-Naimi bring to light: “Freezing now at the January level is adequate for the market. We don’t want meaningful gyrations in prices, we want to meet demand. We want a stable oil value.”

Venezuela’s oil minister, Eulogio Del Pino, has been visiting major oil creators in recent weeks to rally support for the idea of freezing production at current levels in an struggle to stabilise prices.

He said: “We have reached a historic handle for Venezuela and other countries in favour of market stabilisation.”

Shortly after Tuesday’s notification, Mr Del Pino said he would travel to Tehran to meet ministers from Iraq and Iran on Wednesday.

Effigy copyright Getty Images
Image caption Venezuelan oil minister Eulogio Del Pino

Iraq’s oil clericals said the country was also ready to commit to a production freeze if a deal was reached amongst other producers.

Iraq announced record oil production in January, when result from all its fields – including those in the semi-autonomous region of Kurdistan – averaged 4.7 million barrels per day.

It is Opec’s supporter largest oil producer, according to the International Energy Agency.

But Iran’s petroleum supply, Bijan Zangeneh, said that the country would “not forego its oil retail share”.

Iran is keen to recover lost ground after western favours were lifted recently, adding to fears about oversupply.

It level focus ons to raise crude production and exports to one million barrels a day.

Exports recommence

The outback’s deputy petroleum minister, Rokneddin Javadi, said on Sunday that Iran had augmented its crude oil production to 400,000 barrels a day. That figure was expected to swell by another 200,000 barrels.

Iran made it first oil exports to Europe concluding weekend and has also been increasing supplies to Ja n.

Analysts maintain Tuesday’s meeting indicated some progress but many remain disbelieving about whether a concrete agreement among the major producers can be accomplished.

In the face of competition from US shale producers, Saudi Arabia and its Opec leagues in the Gulf have followed a strategy of raising production to protect demand share rather than prices.

Russia, which last accorded to cooperate with OPEC back in 2001, never followed owing to on its pledge and raised exports instead.

‘Positive step’

Its deputy prime serve, Arkady Dvorkovich, has said freezing production was not an issue for Russia as he imagined oil output to be flat this year com red with 2015.

Dominic Haywood, an Power Aspects analyst, said: “While it’s a positive step, I don’t contemplate it will have a huge im ct on supply/demand balances, innocently because we were oversupplied in January anyway.”

City Index analyst Fawad Razaqzada revealed the move had disappointed the market slightly because many had hoped for a cut kind of than a production freeze.

“In the short term, oil prices may come secondary to some pressure. Nevertheless, it is a step in the right direction and if other main producers follow suit then at the very least it should nick to prevent oil prices from suffering further big falls,” he said.

Tensions also be left between Saudi Arabia and Russia over Syria.

Russia is propping President Assad’s regime, with help from Iran while Saudi Arabia as the regional Sunni power is succour opposition forces.

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