Russia says Iran exempt from any oil-freeze deal

Mar 14, 2016, 2:33 PM EDT
Oil rig.
(Source: it's iceberg, baby! (chapter 2)/flickr)

Russia says Iran would be exempt from any potential oil-freeze deal with Saudi Arabia and other big producers.

Reuters reports:

A global deal to freeze oil production could be signed in April and exclude Iran, which has the right to boost output after years of sanctions, Russian energy minister Alexander Novak said on Monday after talks in Tehran. Oil fell around 3 percent on Monday after Iran dampened hopes of a coordinated stabilization of production any time soon, saying it would join such discussions after its own output had reached 4 million barrels per day (bpd).  Four of the world's leading oil producers - Russia, Saudi Arabia, Qatar and Venezuela - met in Doha last month, saying they were ready to hold output at January levels if other producers did the same. A final agreement on an output freeze to support oil prices, which have fallen 65 percent since peaking in June 2014 due to oversupply, is seen next month, possibly again in Doha, Novak said. He said the deal could exclude Iran as the country seeks to regain production hit by now-lifted international sanctions imposed over Tehran's nuclear program."We share (the view) that Iran is in a special situation. The sanctions that had been introduced had materially hit (Iran's) output," Novak said after meeting his Iranian counterpart Bijan Zanganeh.

Bloomberg notes:

Iran pumped 3 million barrels a day in February, data compiled by Bloomberg show. It plans to boost crude output to 4 million barrels a day, the highest level since 2008, Zanganeh said, according to the Iranian Students News Agency on Monday. Saudi Oil Minister Ali al-Naimi said last month in Houston that the process of devising a freeze agreement would continue with more discussions in March. Nigerian Petroleum Minister Emmanuel Kachikwu said two weeks later that talks would convene in Russia on March 20. Russia’s Novak told state television channel Rossiya 24 on March 4 that a meeting could take place between March 20 and April 1 in Russia, Doha or Vienna, where OPEC has its headquarters. So far no countries have received invitations or an agenda for a meeting, said four OPEC delegates, who asked not to be identified because the matter isn’t public.

CNN Money writes:

The latest oil market data reveal that both Russia and Saudi Arabia ramped up their oil production in February, despite talks about supply caps. The two oil countries agreed to freeze output at January levels last month, which caused oil prices to rally. But the deal had many conditions. Most importantly, the two said they'd expect other big oil producers to join in. But that did not happen. Iran called the agreement "a joke," and pledged to boost productionnow that nuclear sanctions have lifted. Tehran said again this weekend it wouldn't participate in any production freeze agreement until it is pumping 4 million barrels per day. That's over 600,000 barrels per day more than it produced in February, according to a report by the Organization of the Petroleum Exporting Countries. Russian oil supply reached a new high of 11.08 million barrels a day in February, according to the OPEC report, with the country adding 10,000 barrels to its daily production since January. Saudi Arabia increased its daily output by 14,000 barrels in February, to 10.14 million barrels per day, according to OPEC's analysis of market sources.