Azernews.Az

By Fatma Babayeva

Although Saudi Arabia announced that it will not put a brake on its oil output unless Iran and others agree to join in, analysts are still optimistic about the upcoming Doha meeting and expect oil production cut.

Saudi Arabia’s deputy crown prince Mohammed bin Salman said that “if all countries agree to freeze production, we’re ready”, in reference to the other members of the OPEC.

“If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door,” he told Bloomberg last week.

Russia and Saudi Arabia, the world’s largest oil producers, together with Qatar and Venezuela have agreed to freeze production at January levels in Doha on February 16. The states set a goal to maintain average production at the level of January 2016, but there was a condition “if other producers will join this initiative as well”.

OPEC and non-OPEC states are going to discuss freezing oil output in market in order to save the collapsing oil prices at the forthcoming meeting in Doha on April 17. Countries like Ecuador, Algeria, Nigeria, Oman, Kuwait and the United Arab Emirates have voiced their willingness to join to the act.

Iran also confirmed its participation in the meeting, but warned that it does not seek to join the initiative.

The price of a barrel dropped by almost 3.3pc as Saudi Arabia voi9ced its “condition”, falling below the $40 dollar mark to $39.

Later, Russian Energy Minister Alexander Novak revealed that Russia may hold separate bilateral talks with Al Riyadh before the Doha meeting if such a necessity or possibility arises.

Russia has not discussed the issue on Iran’s participation in freezing oil production with Saudi Arabia either but it is ready to talk on the matter, Novak told to RIA Novosti.

"I hope that certain consolidated position will prevail during the discussions in Doha, and yet all the parties agree”, said Novak.

Tehran, in turn, stated that the country will discuss freezing oil production only after its output reaches 4 million barrels per day. At present, it is at the level of 3.1 million barrels, according to the data provided OPEC.

Novak has previously spoken in favor of having a different approach to Tehran's involvement in the freezing of oil since the sanctions hindering the export of black gold were lifted just in January.

Nawal Al-Fuzaia, representative of Kuwait at OPEC believes that oil producers may agree to freeze without the participation of Iran in the negotiations, as they have no other choice.

Prices could go higher by the latter part of the year. The Brent crude price is expected to average between $45 and $60 in the second half of 2016 and until 2018, the Kuwaiti official said.

Thomas Pugh, leading British economist at Capital Economics also expressed similar views.

He said that although the Saudi prince’s comments led to a weakening of the market expectations of a possible deal in Doha, still a compromise can be reached, even without the participation of Iran

He believes that Mohammed bin Salman’s statement was spontaneous and it should not be viewed as the final word.

However, Tony Headrick, an energy market analyst at CHS Hedging LLC believes that Iran heavily influences the idea of freezing oil production.

The oil producers may agree to freeze oil production, but Iran's position will have a significant impact on the effectiveness of any deal, he said.

"Given the fact that the meeting is scheduled, it is possible, the parties will reach an agreement, but the patience of oil producers to maintain a stable level of production will dry up with the increasing market share of Iran," Hedrick emphasized.

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