Oil Jumps After Latest Output Freeze Meeting "News"
By Tyler Durden
One of the most farcical instances of report-it-then-promptly-deny-it headline hockey since last summer’s Greek bailout drama has been the incessant barrage of “news” surrounding the oft-celebrated oil output freeze deal struck last month by the Saudis, Qatar, Venezuela, and Russia.
At the time, the market was hoping against hope for an agreement to cut production. After all, Russia and Saudi Arabia are pumping at record levels. As we put it at the time, “it was not exactly clear how ‘freezing’ output at a record level will ‘stabilize and improve’ the market.” Still, this market will take what it can get at this point and since the “agreement” on February 16, prices have indeed risen and some of the gains have – rightly or wrongly – been attributed to the “freeze.”
Casting a pall over the entire thing is Iran who, having just begun to ramp up production after the lifting of international sanctions, isn’t particularly excited about the prospect of taking its foot off the pedal. Asked about participating in the freeze, Oil Minister Bijan Zanganeh said last week that Tehran should “just be left alone,” until production reaches 4 million b/d. At that point, Zanganeh says, “we will join them.”
Of course that’s a non-starter for the likes of Kuwait, whose own oil minister Anas al-Saleh recently warned that his country will “go full power” if everyone (and “everyone” includes the Iranians) isn’t on board with the deal.
On Monday, Russian Energy Minister Alexander Novak spoke with Zanganeh on the phone and once the call was over, indicated that Moscow “understood” its ally in Tehran’s position. “Since Iran’s production decreased under sanctions, we totally understand Iran’s position to increase production and revive its share in the global markets,” Novak said, adding that “within the framework of major oil producers (OPEC and non- OPEC), Iran is liable to have an exclusive way for increasing its oil production.”
And increase production Iran will – by another 1 million b/d by 2017. “The positions of Russia about Iran’s return as well as resumption of stability to the oil market were encouraging and very positive,” Zanganeh said of Novak’s comments.
It’s thus clear that Iran will not be participating in any freeze and so, OPEC and non-OPEC producers are left to decide whether to move ahead with the deal or not.
On Wednesday, we get the latest possibly bogus news in the never-ending output freeze saga as Reuters reported that producers will meet in Doha on April 17 to discuss the deal. That report was “confirmed” around an hour later by Qatari Oil Minister Mohammed Al-Sada. Here are the key points from Qatar:
- QATARI OIL MINISTER SAYS OIL PRODUCERS TO MEET IN DOHA APRIL 17
- QATAR MEETING IS FOLLOW-UP AFTER SAUDI, RUSSIA MEETING IN FEB.
- QATAR: ABOUT 15 PRODUCERS SUPPORT MEETING ON OIL OUTPUT FREEZE
- QATAR: PRODUCERS CONVINCED CURRENT OIL PRICES NOT SUSTAINABLE
- QATAR: DRASTIC DROP IN INVESTMENT AFFECTING GLOBAL OIL …read more
Source: Oil Jumps After Latest Output Freeze Meeting "News"
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