Iran’s position to limit effectiveness of oil “freeze” agreement
Baku, Azerbaijan, April 5
By Aygun Badalova - Trend:
The agreement on oil production "freeze" at the upcoming meeting in Doha is possible, however Iran's position will limit the effectiveness of any deal, Anthony Headrick, energy market analyst at CHS Hedging LLC believes.
"Because a meeting is planned, a "freeze" agreement is possible. The challenge would then shift to accountability, which history has proven to be difficult. Patience in holding production levels steady will quickly wear thin as Iran continues to gain market share," Headrick told Trend on April 5.
"In the end, the market will likely find any agreement as a mask on an already oversupplied market," he added.
On April 17, major oil producers are expected to meet in Doha to discuss an agreement to freeze oil output at January 2016 levels. In February, representatives from Saudi Arabia, Qatar, Venezuela, and Russia discussed possible measures to stabilize the current oil market, including the oil production freeze.
Headrick mentioned that Saudi Arabia has indicated it will not freeze production if major producers, such as Iran, do not participate.
"Even if that stance shifts and Saudi Arabia agrees to freeze production, Iran's stated push to produce at pre-sanction production levels will severely limit the effectiveness of any agreement," Headrick said.
Last week Saudi Arabia's Deputy Crown Prince Mohammed bin Salman said that Saudi Arabia will only freeze its oil output if Iran and other major producers do so.
Iran's Oil Minister Bijan Namdar Zanganeh in its turn said that Tehran will not join the oil output freeze plan. He said Iran may participate in the talks with fellow OPEC members and Russia in Qatar April 17 without joining their proposal to freeze crude oil production.
The National Iranian Oil Company's CEO Roknoddin Javadi said in March that Iran's oil export has reached 1.8 million barrels per day.
The country's daily output should reach 4 million barrels the next Iranian year (to start March 20), he said, stressing that Iran will continue to increase the export.