OPEC members could revive freeze talks in September

Several OPEC members want to resurrect the idea of setting new limits on oil production this fall as Iran regains much of the crude oil production it lost during years of Western sanctions, people familiar with the matter tell Reuters.

The countries, including Venezuela, Ecuador and Kuwait, want to again try cooperation between the 14-nation oil cartel and non-members like Russia, Kallanish Energy learns.

A similar initiative went nowhere in April during talks in Doha, Qatar, when Saudi Arabia back out over Iran’s refusal to join in a production freeze until it had reached pre-sanctions levels of oil production.

Under the freeze, countries would have agreed to limit their production to January levels in a bid to raise oil prices by constricting the amount of crude on the market.

Now, Iran’s production has grown to 3.6 million barrels a day (MMBPD), about 180,000 barrels a day (BPD) above its levels in April, and almost 600,000 BPD higher sanctions were lifted in January.

That brings Iran close to the 4 MMBPD to 4.2 MMBPD Iranian officials said they would require before agreeing to a freeze.

A spokeswoman for Iran’s oil ministry declined to comment on whether Iran would now consider joining an output freeze.

Some OPEC members said they believe they could pass a freeze deal as early as the week of Sept. 26, when oil producers meet for the International Energy Forum in Algeria. By then, Iran could be closer to 4 MMBPD, OPEC delegates told Reuters.

Venezuela’s Oil Minister, Eulogio Del Pino, has contacted the cartel’s Secretary-General, Mohamed Barkindo, to propose a discussion on coordinating output, the country’s president, Nicolas Maduro, said last week according to state news agency Agencia Venezuela de Noticias.

Renewed talk of an oil-production freeze comes as crude prices remain stuck at levels far below what most OPEC nations need to balance their budgets. Brent, the international benchmark, has fallen roughly 17%since June, when it reached a high of over $52.

Oil prices on Friday fell further, with Brent closing Friday at $44.27 a barrel.

In June, when prices were just above $50 a barrel, Saudi Arabia’s energy minister Khalid al-Falih told reporters the price then was too low.

The countries, including Venezuela, Ecuador and Kuwait, want to again try cooperation between the 14-nation oil cartel and non-members like Russia, Kallanish Energy learns.

A similar initiative went nowhere in April during talks in Doha, Qatar, when Saudi Arabia back out over Iran’s refusal to join in a production freeze until it had reached pre-sanctions levels of oil production.

Under the freeze, countries would have agreed to limit their production to January levels in a bid to raise oil prices by constricting the amount of crude on the market.

Now, Iran’s production has grown to 3.6 million barrels a day (MMBPD), about 180,000 barrels a day (BPD) above its levels in April, and almost 600,000 BPD higher sanctions were lifted in January.

That brings Iran close to the 4 MMBPD to 4.2 MMBPD Iranian officials said they would require before agreeing to a freeze.

A spokeswoman for Iran’s oil ministry declined to comment on whether Iran would now consider joining an output freeze.

Some OPEC members said they believe they could pass a freeze deal as early as the week of Sept. 26, when oil producers meet for the International Energy Forum in Algeria. By then, Iran could be closer to 4 MMBPD, OPEC delegates told Reuters.

Venezuela’s Oil Minister, Eulogio Del Pino, has contacted the cartel’s Secretary-General, Mohamed Barkindo, to propose a discussion on coordinating output, the country’s president, Nicolas Maduro, said last week according to state news agency Agencia Venezuela de Noticias.

Renewed talk of an oil-production freeze comes as crude prices remain stuck at levels far below what most OPEC nations need to balance their budgets. Brent, the international benchmark, has fallen roughly 17% since June, when it reached a high of over $52.

Oil prices on Friday fell further, with Brent closing Friday at $44.27 a barrel.

In June, when prices were just above $50 a barrel, Saudi Arabia’s energy minister Khalid al-Falih told reporters the price then was too low.

Source: Kallanish Energy