All eyes on Doha as oil exporters prepare for critical meeting

29 March 2016

Doubts over Iran’s attendance as at least 10 Opec and non-Opec members accept invites

As the Brent crude price falls from its recent peak of close to $42 a barrel, all eyes are on the planned meeting of oil exporters in Doha on 17 April.

At least 10 countries are due to attend the gathering in an attempt to gain a widespread freeze on production levels to shore up prices.

Qatar has invited all the members of oil producers’ group Opec along with other major exporters including Russia, amid a chronic oversupply in the global crude market – prices have stayed at about $40 a barrel for the majority of March.

According to reports, Qatar’s Ministry of Energy & Industry says 15 countries, representing about 73 per cent of global crude production, are supporting the oil freeze initiative.

The countries confirmed to attend the meeting are Opec members Algeria, Iraq, Kuwait, Nigeria, Qatar, Saudi Arabia, the UAE and Venezuela, as well as non-Opec countries Russia and Oman.

Representatives from these countries are due to holds talks on whether to freeze prices at January 2016 levels in order to alleviate global supply and thus buoy prices.

One of the big questions marks is the potential attendance of Iran, which recently ruled out a production freeze as it pushes to recover oil output to pre-sanctions levels.

Iran is the only country invited with the ability and motivation to significantly increase production, and is attempting to boost output by 1 million barrels a day (b/d) by the end of 2016.

“They should leave us alone as long as Iran’s crude has not reached 4 million [b/d]. We will accompany them afterwards,” Iran’s Petroleum Minister Bijan Zanganeh was quoted as saying earlier this month.

Tehran increased crude production by 187,800 b/d in the first month after sanctions were lifted against its energy sector, according to Opec. The organisation estimated, based on secondary sources, that the Islamic Republic’s output rose to 3.13 million b/d in February, compared with 2.94 million b/d in January.

Libya, which is producing at well below its nominal capacity, has declined the invite.

Saudi Arabia, which has a spare capacity of just under 2 million b/d, is already producing at close to record levels. Freezing output at January levels is unlikely to affect the kingdom’s strategy.

Russia, the world’s largest oil producer, is also pumping at close to record volumes.

Without Iran on board, a multilateral freeze in production volumes may not immediately reduce oversupply in the global market, but it could build confidence of stability in the market.

The meeting will also help develop ties between Opec and non-Opec producers, with the larger bloc able to wield more influence if further measures are taken in the future.

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