23 February 2016, Caracas — A deal to freeze oil production could help buoy depressed crude prices by $10 to $15 dollars a barrel, according to Venezuela’s Oil Minister Eulogio Del Pino, who called on OPEC and non-OPEC countries to join the agreement.
Leading OPEC member Saudi Arabia, non-OPEC member Russia, Qatar and Venezuela agreed last week to freeze output at January levels if others joined in. Iran welcomed the move but stopped short of pledging to act itself and it is unclear whether the freeze will actually happen.
“This (deal) will help reach an equilibrium price,” Del Pino told state television VTV on Monday morning.
“We estimate that there will be a recovery around the middle of the year of some $10, $15 dollars, it’s not convenient that oil return to over $100 because then that produces a cycle of falls.”
International benchmark Brent crude futures were at around $34.06 a barrel at 1134 GMT on Monday.
“We’re calling on the rest of producer countries, OPEC and non-OPEC, to join this measure until June and create a monitoring committee to see how prices and supply volumes evolve,” added Del Pino, who is also president of state oil company PDVSA [PDVSA.UL].
Venezuela has been pushing for an oil deal to offset a brutal recession that cost the leading Socialist Party its legislative majority in a December election.
Del Pino has called the deal clinched in Doha the “first step” towards a wider pact, but there are doubts the Doha agreement itself will be successful.
A senior U.S. energy official said he was “highly skeptical” of the deal’s ability to revert an oversupplied market.
Russia and OPEC were both pumping oil at near-record volumes last month, with Russia reaching another post-Soviet high of 10.88 million barrels per day (bpd).
Del Pino said lack of action could lead to a price collapse due to record crude stocks.
Venezuela, which has the world’s largest oil reserves, is currently producing around 2.9 million bpd per day, Del Pino said, with some 500,000 bpd going to the domestic market.
“We’re going to maintain that through to June,” he added.
*Eyanir Chinea & Alexandra Ulmer; Alexandra Ulmer; Editing – Andrew Cawthorne & Frances Kerry – Reuters