Russia, Saudi Arabia Reach Oil-Freeze Consensus, Interfax Says
Saudi Arabia and Russia have reached an agreement that means the Persian Gulf nation will make a final decision on freezing oil production regardless of whether Iran agrees to join, Interfax reported Tuesday.
The consensus was reached during talks between the two nations on Tuesday, Interfax reported citing an unidentified “informed diplomatic source.”
At least 16 nations including the world’s two largest crude oil producers will gather in Doha on April 17 to discuss freezing output at January levels in order to stabilize an oversupplied oil market. Saudi Arabia has insisted it would only commit to a production cap if Iran follows suit, a proposal that Iran’s oil minister has dismissed as “ridiculous.”
Top executives at the world’s largest oil-trading houses said the worst of the market’s woes are probably over, with some predicting prices will climb to $50 a barrel by next year.
“The down market is behind us,” Torbjorn Tornqvist, chief executive officer of Gunvor Group Ltd., said on Tuesday at the FT Global Commodities Summit in Lausanne. “It is the beginning of the end of that for sure.”
Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut will ease as U.S. output declines. The world’s largest oil traders were meeting in Switzerland as members of OPEC and other major producers prepare to assemble in Doha on April 17 to discuss an output freeze. Oil traders benefited from a surge in volatility last year and that should continue, according to Tornqvist.
“We are going to have lots of volatility going forward,” Tornqvist said. “From here on the trend is up.”
A “rebalancing” of global crude oil supply and demand could take place by the end of the third quarter as production cuts by cash-strapped producers start to curb the current glut, according to Trafigura Group Pte CEO Jeremy Weir.
“I believe we’ve seen the bottom unless there is some sort of catastrophic situation, political or otherwise,” Weir said.