Russia and the Organization of Petroleum Exporting Countries can reach an agreement to freeze oil production, even if Iran doesn’t join in, a top OPEC official told Bloomberg News.
Kuwaiti OPEC governor Nawal al-Fezaia's prediction of an output freeze excluding Iran in an interview with Bloomberg helped send oil prices soaring more than 5 percent on world markets on April 6 and 7.
Fezaia said oil-producing countries have no alternative but to reach an agreement to freeze output when they meet on April 17 in Doha, Qatar, because prices are too low.
She said the freeze may be at February levels and would be aimed at setting a floor under oil prices.
“Oil producers have no option but to freeze their production as oil prices are low and hurting everyone,” she said. “All early signs before the meeting point to this conclusion.”
Producers are meeting in Doha to finalize the agreement to freeze production reached earlier this year between OPEC's top producer Saudi Arabia and Russia, the largest producer outside the cartel.
Russian sources told Reuters on April 6 that the output freeze is on track and Russia and OPEC are discussing the details, such as how long to maintain it and how to monitor it.
Russian Foreign Minister Sergei Lavrov said on April 7 that the energy ministers from Russia, Iran, and Azerbaijan will attend the talks in Doha.
That's despite earlier in the week suggestions by Russia that OPEC would start the freeze without Iran and allow Tehran to join next year after it restores the 4 million barrels a day output that it maintained before international economic sanctions were imposed in 2012.
The Russian-Saudi output freeze plan was thrown into doubt after Iran insisted it must be allowed to restore output after the sanctions were lifted in January, and Saudi Arabia said it would not freeze production unless Iran follows suit.
But Fezaia told Bloomberg that rising production from Iran won’t hinder the output freeze agreement as Tehran will find it difficult to sell its crude in an oversupplied market.
Fezaia expects the oil market to return to balance in the second half of the year. Oil prices may end the year between $45 and $60 a barrel, she said.
Brent North Sea premium crude jumped $1.97 to $39.84 a barrel in London trading on her comments on April 6, and the gains were extended in early trading in Asia on April 7.
With reporting by Bloomberg, Reuters, and AFP