Saudi Arabia And Russia Agree Oil-Output Freeze

  • Nations agree to maintain output at Jan. 11 level
  • Ministers from Qatar, Venezuela also agreed to freeze

Saudi Arabia and Russia, the world’s two largest crude producers, agreed to freeze output after talks in Qatar.

Freezing output at January levels will be “adequate” and the nation still wants to meet the demand of its customers, Saudi Oil Minister Ali Al-Naimi said in Doha after talks with Russian Energy Minster Alexander Novak. Qatar and Venezuela also agreed to participated in the freeze, Al-Naimi said.

“A freeze would not create an immediate U-turn but it creates a better foundation for the price recovery in the second half,” Olivier Jakob, head of oil consultants Petromatrix GmBh, said in a note to clients before the meeting concluded.

Oil pared gains after the announcement. Brent crude was 2.4 percent higher in London at $34.20 a barrel, having earlier climbed as much as 6.5 percent.

According the International Energy Agency, Saudi Arabia produced 10.2 million barrels a day in January, below the most recent peak of 10.5 million barrels a day set in June 2015. Russia produced nearly 10.9 million barrels a day in the same month, a post-Soviet record, according to official data.

Qatar will lead monitoring of output freeze agreement, the nation’s Energy Minister Mohammad bin Saleh al-Sada said at a press briefing. Low oil prices haven’t been positive for the world, he said.

More than a year since the Organization of Petroleum Exporting Countries decided not to cut production to boost prices, oil remains about 70 percent below its 2014 peak. Supply still exceeds demand and record global oil stockpiles continue to swell, potentially pushing prices below $20 a barrel before the rout is over, according to Goldman Sachs Group Inc.

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Bloomberg

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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