Saudi Arabia and Russia have decided to freeze crude oil production at January levels, something "adequate" to meet demand. Since June 2014, oil prices have plunged by 70 per cent. Tomorrow the meeting will include the representatives of Iran and Iraq.
Doha (AsiaNews/Agencies) – Saudi Arabia and Russia are on opposite sides in the Syrian conflict; however, the world’s two largest crude producers have agreed to freeze output at January levels after talks in Qatar.
Freezing output at January levels will still be “adequate” meet market demands, Saudi Oil Minister Ali Al-Naimi said in Doha after talks with Russian Energy Minister Alexander Novak.
Qatar, which currently chairs OPEC, and Venezuela, fifth largest oil exporter, will also participate in the freeze.
The four oil producers "agreed to freeze the production at (the) January level provided that other major producers follow suit," Qatar's Energy Minister Mohammed bin Saleh al-Sada told reporters. "This step is meant to stabilise the market.”
Oil seems to have brought together two nations otherwise on opposite sides in the Syrian conflict with Moscow among the earliest supporters of Syrian President Bashar al-Assad and the Saudis close to the Syrian opposition.
The agreement reached today in Doha on production limits should stop the collapse in oil prices, down by 70 per cent since June 2014. Production levels will remain at the January 2016 levels for the near future.
Until now, Saudi Arabia had ruled out production limits unless any agreement was binding on non-OPEC members, like Russia. Venezuela and Qatar signed up for the deal.
Although many investors expected a production cut, oil pared gains after the announcement, for now.
Crude-oil prices have plunged since June 2014 largely because of surging supplies from the United States and Iran. The end of sanctions following the nuclear deal is also going to allow Tehran to boost exports.
Lower demand from countries like China, where growth has slowed, is another factor.
For some analysts and experts, this is the first step towards cutting production.
Now markets are waiting to see what comes of a meeting, scheduled for tomorrow, which will see the participation of two other major oil exporters, Iran and Iraq.