Crude oil prices trimmed back from earlier sharp gains Tuesday morning, after energy ministers from top oil producers agreed to freeze output, but not to cut production.
After talks in Qatar, global oil exporters including Saudi Arabia and Russia, the world’s two largest crude producers, agreed to freeze output, but said the deal was depending on other producers, with Iran absent from the meeting and planning to increase shipments.
The Saudi, Russian, Qatari and Venezuelan oil ministers visited Doha for a previously undisclosed meeting – their highest-level discussion in months on joint action to help prices recover from the last blow.
Qatar will lead monitoring of output freeze agreement, the nation’s Energy Minister Mohammad bin Saleh al-Sada said at a press briefing. Low oil prices haven’t been positive for the world, he said.
The Doha meeting came after more than 18 months of declining oil prices, bashing crude below $30 a barrel for the first time in over a decade.
Freezing output at January levels will be “adequate” and the nation still wants to meet the demand of its customers, Saudi Oil Minister Ali Al-Naimi said in Doha after talks with Russian Energy Minister Alexander Novak.
He said he hoped other producers would adopt the proposal, while Venezuela’s Oil Minister Eulogio Del Pino said more talks would take place with Iran and Iraq on Wednesday.
“A freeze would not create an immediate U-turn but it creates a better foundation for the price recovery in the second half,” Olivier Jakob, head of oil consultants Petromatrix GmBh, said in a note to clients before the meeting concluded.
Oil prices rose to $35.55 per barrel but later pared gains to trade below $34 as expectations for an immediate deal faded.
Iran has vowed to ramp up supply sharply in the next month as it looks to regain market share lost after years of international sanctions, which were lifted in January.
The slump has been longer and deeper than anyone predicted, and the mood may be shifting among producers that have been determined to defend market share rather than prices.
The Organization of the Petroleum Exporting Countries agrees that a decision must be reached on how to prop up prices, Nigerian Oil Minister Emmanuel Ibe Kachikwu told Reuters late last week.
Great changes took place since OPEC’s fractious meeting in early December, the last big gathering of major oil ministers, when members “were hardly talking to one another. Everyone was protecting their own positional logic,” Kachikwu said.