EMEA News
Critics Dismiss Joint Oil Freeze Talks as "An Empty Gesture" as OPEC Confirms Iran Won't be Participating
Abdullah al-Badri, secretary general for the Organization of the Petroleum Exporting Countries (OPEC), says Iran will not be participating in an April 17 meeting in Qatar with members and non-members to discuss freezing production, media reports.
But as the meeting date approaches, critics are reiterating their argument that the proposed freeze is entirely symbolic anyway.
Julian Lee, oil strategist for Bloomberg First Word, writes, "A freeze would be an empty gesture: none of the countries that intend to take part, with the possible exception of Saudi Arabia, was expected to raise production in any case."
He goes on to state, "Most OPEC countries are already producing at capacity, while output in Russia, the biggest producer outside OPEC, is expected to fall over the course of 2016 as ageing West Siberian deposits aren't replaced."
Lee also notes that Iran is currently producing about 3 million barrels of oil per day and will only freeze output once it reaches 4 million per day.
This is entirely in keeping with al-Badri's comments at a news conference in Vienna, where he told reporters in reference to Iran that "They have some conditions about their production; maybe in the future they will join the group."
Other analysts point out that talks of the freeze aren't having a major impact on prices, either: Fatih Birol, executive director for the International Energy Agency, told Bloomberg Television that declines in U.S. shale output are contributing more to the rise in oil prices than talks, and that if a freeze was agreed upon "it would be unexpected that it would have major implications, at least in the first half of 2016."
As for new output opportunities affecting the global market, Lee says new production off Angola and Nigeria being delayed due to low oil will cause involuntary output declines from OPEC countries to "gather pace; that will make the planned output freeze redundant."
It is anyone's guess if or when Iran will reach its 4 million barrel goal, but as far as trading on the international market goes, the Islamic Republic is having questionable success: it has sold only 4 million barrels since the sanctions were lifted in January, equal to five days' worth of sales at pre-2012 levels.
