Venezuelan Minister of petroleum, Eulogio del Pino during a recent tour of the key exporters of hydrocarbons has proposed to freeze production at the current level, told Reuters several sources. According to their information, this initiative has met with understanding in Saudi Arabia, Russia and Qatar.
Interlocutors of Agency told that talking about consent Riyadh premature, as it will depend on the willingness of Iran to limit its desire to increase exports after the lifting of sanctions. One of the sources confirmed that the idea of “freezing” of production was discussed at the Sunday meeting del Pino with Saudi oil Minister Ali al-Naimi, but the negotiations are still at an early stage and everything will depend on readiness of Teheran to make concessions.
“Discussion continued on the idea of the in a short time by freezing. This is now happening,” said one of the sources. He added that Russia and Qatar have given their prior consent, subject to the availability of consensus among other oil exporters.
A source in OPEC said that the “freezing” of production can be a temporary compromise, which will agree the majority of exporters already operating at maximum capacity, and this will help to support prices. He added that, with the exception of Iran all already extracted the maximum, and the position of Tehran will be key to any agreement.
According to this source, “freeze” will become a positive signal for the market and help the recovery of prices if the Iranians agree to limit the increase in production to 300 thousand barrels per day, which they have already, according to them, promised Europe. Another factor, he said, should be a slowdown in production of shale oil in the United States.
A Reuters source familiar with the position of Tehran, said that the idea of “freezing” will not find significant support in OPEC. The news Agency noted that Iraq also ramping up production.
The official representative of one of the members of OPEC confirmed the Agency difficulty succeeding in achieving agreement on “freezing” of production. He stressed that the agreement should be between all exporters and not only in the framework of the cartel. “If we get together without agenda, we will not solve this problem prices,” he said, adding that a concrete plan for the meeting yet.
After falling 15% during the last five trading sessions the price of us WTI crude oil fell to 19:00 there is another 3.86% to $26.37 per barrel. According to the U.S. Department of energy, the stocks in the storage tanks at Cushing rose last week to 523 thousand barrels. up to 64.7 million barrels and a working capacity of 73 million barrels, according to Bloomberg. Overall U.S. oil reserves dropped last week by 754 thousand barrels, and but remain above 130 million barrels., what’s more five-year high.
Analyst at UBS Group in Zurich Giovanni Taunovo noted that WTI prices fell stronger than Brent, to prevent further growth of inventories in Cushing by increasing demand for local instead of imported oil. The April futures for Brent crude on London exchange ICE fell in today’s auction, on of 1.70% to the closing price of up to $30,32/bbl.
From the beginning, the oil lost 28% of its value due to rumors about the preservation of oversupply with the increase in Iranian exports and rising stocks in the US, Bloomberg reminds.