17 March 2016, Doha — Saudi Arabia will join a meeting of producers from within and outside OPEC in Doha next month, adding weight to the campaign by financially stricken crude exporters to freeze output and overcome the glut that’s weighing on the market.
Qatar’s oil minister said that countries would meet in the nation’s capital Doha on April 17, without providing details of who would attend. While the participation of Iran is seen as critical for the deal to be effective, the meeting may go ahead without the Persian Gulf nation, according to two delegates who asked not to be identified because the talks are private. Saudi Arabia will attend, according to a person with direct knowledge of the kingdom’s oil policy.
Prices have rallied more than 30 percent since a mid-February proposal by Saudi Arabia, Russia, Venezuela and Qatar to cap oil output and reduce a worldwide surplus that had seen prices slump to 12-year low in January. The summit in April would seek commitments from a wider range of producers both within and outside the Organization of Petroleum Exporting Countries.
Kuwait was the first other OPEC member to confirm it would attend, according to an e-mailed statement from its oil minister. Russian Energy Minister Alexander Novak, speaking to reporters in Moscow, said that 15 countries have confirmed they’ll participate and that Iran is willing to join in. Novak and Saudi Oil Minister Ali al-Naimi planned to discuss the meeting on Wednesday by phone, one person said. Delegates from four OPEC members said they hadn’t yet received an invitation.
April 17 is the latest and firmest date in a series of suggested times for follow-up talks on the freeze. Nigerian Petroleum Minister Emmanuel Kachikwu said on March 3 that those talks would be held in Russia on March 20. The next day, Russian Energy Minister Novak told state television channel Rossiya 24 that a meeting could take place between March 20 and April 1 in Russia, Doha or Vienna.
The proposed freeze “put a floor under oil prices,” Qatari Oil Minister Mohammad Al-Sada said in an e-mailed statement on Wednesday. “To date, around 15 OPEC and non-OPEC producers, accounting for about 73 percent of global oil output, are supporting this initiative.”
Oil rallied after the Qatari statement, gaining 4.1 percent Wednesday to settle at $40.33 a barrel in London.
There are reasons to be doubtful that the planned freeze can radically alter an oil market that’s fallen victim to a global fight for market share, causing stockpiles to rise to a record. Most significantly, Iran is seeking to increase production after the end of economic sanctions and has said it won’t participate in any accord until its output has recovered.
Iran boosted output by 187,800 barrels a day to 3.13 million a day in February, the biggest monthly gain since 1997, OPEC said in a report on Monday.
Brazil will also add more than 100,000 barrels of supply this year and has shown little interest in taking part.
“We will now see if OPEC and Russia are able to freeze the bears in the oil market,” said Olivier Jakob, managing director at consultants Petromatrix GmbH. “The significance of the agreement is that it could remove the perception that OPEC is fighting for market share.”
Other forces have driven prices higher in recent weeks. Outages from Iraq and Nigeria have disrupted more than 800,000 barrels a day of supply and tightened the Brent market, according to Citigroup Inc. And falling drilling activity in the U.S. shale industry has seen analysts raise forecasts for declines in North American production.
One key question is how fast shale production could come back if OPEC and some non-OPEC producers succeed in driving prices higher.
Oil ministers for Argentina, Venezuela and Colombia didn’t immediately respond to questions on whether they would attend. Ecuador’s oil minister said he still plans to gather Latin American producers before the April 17, after a planned meeting earlier this month was postponed.
“It’s not surprising they’d be willing to agree to this because the outlook for a further production increase was quite limited,” Jeff Currie, global head of commodities research at Goldman Sachs Group Inc., said in an interview on Bloomberg Television. “You can’t operate a cartel the way you used to.”
*Wael Mahdi, Mohammed Aly Sergie & Grant Smith; Francine Lacqua, Elena Mazneva, Angelina Rascouet & Andrey Biryukov – Bloomberg