Brent oil traded near $32 before a meeting between Iraq and Iran in Tehran after Saudi Arabia and Russia agreed to freeze production at near record levels amid a global glut.
Futures in London were little changed, giving up earlier gains of as much as 2 percent. Iran’s Oil Minister Bijan Namdar Zanganeh will meet with counterparts from Iraq, the second- biggest OPEC producer, and Venezuela on Wednesday, the Iranian news agency Shana said. The preliminary deal to fix output at January levels is the “beginning of a process” that may require “other steps to stabilize and improve the market,” Saudi Oil Minister Ali Al-Naimi said in Doha.
“Iraq and Iran are the two countries that are going to contribute to growth from the OPEC nations this year,” Richard Gorry, managing director at JBC Energy Asia in Singapore, said in a Bloomberg Television interview. “Getting an agreement from these is going to be very difficult, particularly in the case of Iran. I wouldn’t expect oil to breach $40 until we get into the second half of the year, that’s simply because we’re massively oversupplied.”
Oil has dropped about 25 percent since the Organization of Petroleum Exporting Countries effectively abandoned output targets at a meeting in early December. Iran, the second-biggest member of OPEC before sanctions were intensified in 2012, is seeking to boost production by 1 million barrels a day and regain market share after penalties were lifted. The nation has loaded its first cargo to Europe, while Chinese and Spanish companies have also booked shipments.
Brent for April settlement traded at $32.05 a barrel on the London-based ICE Futures Europe exchange, down 13 cents at 2:14 p.m. Hong Kong time. The European benchmark was at a premium of $1.01 to West Texas Intermediate for April. Total volume traded was about 55 percent above the 100-day average.
WTI for March delivery was 11 cents lower at $28.93 a barrel on the New York Mercantile Exchange. The contract fell 40 cents to settle at $29.04 on Tuesday. Prices sunk to a 12-year low this month after falling 30 percent last year.
Iran will “not forgo its share of the market,” Zanganeh said Tuesday, according to Shana. The nation pumped 2.86 million barrels a day in January, making it the fifth-biggest producer in OPEC, according to data compiled by Bloomberg. Iraq is ready to join Saudi Arabia in freezing output, or even cut, if others commit to the accord, said an official who asked not to be identified because oil policy is private.
Venezuela, which will join the pact with Qatar, has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between OPEC members and other suppliers in an attempt to reach an agreement to balance the market. The freeze is conditional on other nations agreeing to participate, Russia’s Energy Ministry said in a statement.
Saudi Arabia pumped 10.2 million barrels a day in January, according to data compiled by Bloomberg. Russian output of crude and a light oil called condensate climbed 1.5 percent last month from a year earlier to 10.9 million barrels a day, a post-Soviet high, according to a unit of the country’s Energy Ministry.
The slump in oil prices is affecting producers across the globe. Devon Energy Corp. is reducing its workforce by 20 percent in the first quarter while slashing its quarterly dividend to 6 cents a share from 24 cents, according to a statement Tuesday. It also expects 2016 capital spending between $900 million and $1.1 billion, down 75 percent from a year earlier.
Woodside Petroleum Ltd., Australia’s second-largest oil and natural gas producer, reported a 99 percent decline in full-year profit, its worst result in 13 years. Net income sank to $26 million from $2.41 billion a year earlier, Perth-based Woodside said on Wednesday. Chief Executive Officer Peter Coleman is skeptical oil will recover this year and said the company is planning for a $35 price through 2017.
Recommended for you
