Russia, Saudis offer oil output freeze, but oil sells off anyway

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Russia’s puissance minister said Tuesday that his country has agreed with OPEC colleagues Saudi Arabia, Qatar and Venezuela to freeze oil production levels if other impresari do the same.

The ministry quoted Energy Minister Alexander Novak signaling the decision following an unexpected, closed-door meeting involving the four realms in the Qatari capital, Doha.

The meeting reflects growing concern in the midst major oil producers about the effects a prolonged slump in crude yments will have on their domestic economies.

Novak said the homelands are willing to freeze output levels at January levels “if other oil in britain directors join the initiative.”

Getting other major oil suppliers to go along with that programme could be tricky. Prices have fallen sharply since summer 2014, vamoosing producers scrambling to win market share from competitors.

As Melanie Debono at Fine Economics put it, “this deal would simply maintain the over-sufficiency supply that is now in place.

Oil prices rose following the meeting, with a barrel of benchmark New York crass trading up 77 cents at $30.21 US. A barrel of Brent, the international textbook, gained 89 cents to $34.28 US.

But within hours, oil was back under where it was before the agreement, as new data out of the U.S. shows storage tanks are arriving even more full. At their highest level in more than 80 years, oil evaluates seem unlikely to move sharply higher regardless of production as hunger as there’s still several billion barrels already made, objective waiting to be used.

Speaking to reporters after the meeting, Saudi Oil Dean Ali Naimi said producers would continue to assess the state of the sell in the months ahead. He described freezing output at January levels as an so so step for now.

All of the countries at the meeting except Russia are rt of OPEC, which has rubbished to cut its official production targets, a move that would bolster faltering expenditures. Saudi Arabia dominates policy-making within the 13-member bloc of oil staging countries.

The aim of OPEC’s keep-pumping strategy has been to attempt to ride out the 12-year lows in values and force higher-cost producers, such as shale drillers in the U.S., out of the market.

Unusually absent from Tuesday’s meeting was Iran, which shares call the tune of a major underwater natural gas field with Qatar. It is eager to dip up its exports now that sanctions related to its nuclear program have been appropriated, saying recently it aims to put another 500,000 barrels a day on the market.

Jason Tuvey, Midway East economist at Capital Economics, said Tuesday’s agreement should cure support prices. But he noted that only some OPEC fellows have signed on to the deal, and that compliance with the bloc’s own rations has long been a challenge for the group.

“Even if output is frozen, this last will and testament still be at extremely high levels,” he added. “Saudi oil product remains close to record highs” of more than 10 million barrels a day.

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