OPEC Edges Closer to Freeze on Oil Production

Saudi Arabia, Russia and Qatar have agreed with Venezuela to freeze their monthly oil production at current levels—if other members of the Organization of the Petroleum Exporting Countries agree to do the same—in hopes of ending the global petroleum glut.

Venezuela is trying to broker the deal, BBC News reports. It says the country’s oil minister plans to meet with with his counterparts at Iran and Iraq on Wednesday.

But BBC News notes that skeptical traders caused oil futures to drop to around $30 per barrel yesterday. Oil prices were at $116 in June 2014.

Growth in petroleum demand zoomed to a five-year high of 1.6 million barrels per day in 2015, according to the Paris-based International Energy Agency. It slowed to 1.2 million bpd in January. But the current oil glut eased only slightly in January as a 280,000 bpd increase in OPEC’s output partially offset declines by other producers.

Achieving accord among the cartel’s 12 members won’t be easy. OPEC continually sets voluntary production quotas for its members, but they routinely ignore them.

IEA notes that Iraq hiked its petroleum output to a record 4.7 million bpd in January. And BBC notes that Iran, now free of international sanctions, is eager to regain market share by hiking its output from 400,000 bpd to 1 million bpd.