Oil nations 'near deal to freeze output till October'

A fuel pump near Salwa village in Saudi Arabia. Like other major oil producers, Saudi Arabia has been hit by the continued slump in oil prices.
A fuel pump near Salwa village in Saudi Arabia. Like other major oil producers, Saudi Arabia has been hit by the continued slump in oil prices. PHOTO: REUTERS

No agreement yet on draft pact that seeks to cap production at Jan levels to bolster prices

DOHA • Oil-producing countries meeting in Doha yesterday appeared close to agreeing on an output freeze to prop up crude prices, the first such deal in 15 years, a Reuters report said.

A draft agreement circulating in Doha and seen by Reuters said the countries' average daily crude oil production in each month would not exceed the level recorded in January this year.

The freeze would last until Oct 1 this year, and producers would meet again in October in Russia to review their progress in engineering "a progressive recovery of the oil market", the draft read.

Final agreement had not been reached on the draft, but several senior sources in national oil ministries said they believed that a deal could be achieved.

"I am optimistic," Acting Kuwaiti Oil Minister Anas Khalid al-Saleh said on Saturday regarding prospects for a deal.

The role of Teheran, which wants to ramp up its oil production after the lifting of economic sanctions on Iran in January, is a key concern.

Another delegate, declining to be named because of political sensitivities, said: "There is only one proposal. Freeze at the January level till October. There is a proposal to meet in October and to look forward."

A third senior oil source told Reuters: "We have a deal."

More than a dozen oil-producing countries inside and outside the Organisation of Petroleum Exporting Countries (Opec) had officially confirmed that they would attend the meeting in Doha - although major producer Iran said it would not participate as it could not accept proposals to freeze its production.

During the proposed freeze, producers would continue to consult on the best ways to bolster the oil market, and the deal would be open for other states to join in, the draft agreement said.

The draft provided for the creation of a "high-level monitoring committee" consisting of two oil ministers from the 13 Opec countries and two from non-Opec countries; they would be assisted by a working group of experts.

Although a freeze would be a significant step for oil producers, it would have only a limited impact on global supply, and the market is unlikely to rebalance before next year, the International Energy Agency said on Thursday.

The role of Teheran, which wants to ramp up its oil production following the lifting of economic sanctions on Iran in January, is a key concern.

Publicly, Saudi Arabia has taken a tough stance on Iran.

Deputy Crown Prince Mohammed bin Salman told Bloomberg in recent days that the kingdom would restrain its output only if all other major producers, including Iran, agreed to freeze their production. It was not clear whether Saudi Arabia would stick to this position.

A version of this article appeared in the print edition of The Straits Times on April 18, 2016, with the headline 'Oil nations 'near deal to freeze output till October''. Print Edition | Subscribe