Saudi Arabia has provisionally agreed with Russia to freeze oil output at January levels, in a co-ordinated move to reduce a supply glut and shore up prices.
After more than 15 months of opposition to unilaterally cutting oil supplies, Saudi Arabia’s powerful oil minister Ali al-Naimi said the agreement between some of the world’s major producers to freeze output should be enough to stabilise the market, which has been hit by a 70 per cent slide in prices.
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The announcement followed a closed-door meeting in Doha between Opec powerbroker Saudi Arabia and Russia, the largest exporter outside the cartel, as well as Venezuela and Qatar. News of the meeting only leaked late last night, surprising oil markets and sending prices up by as much by 6 per cent on Tuesday morning.
“Freezing now at the January level is adequate for the market, we believe,” Mr Naimi said, according to Reuters.
“We recognise today the supply is going down because of current prices. We also recognise that demand is on the rise.”
Alexander Novak, Russia’s energy minister, said in a statement following the meeting: “As a result of the meeting, four countries — Russia, Saudi Arabia, Qatar and Venezuela — are ready to freeze oil production at the level of January, if other producers join this initiative.”
Qatar’s energy minister Mohammad bin Saleh al-Sada, who hosted the meeting, said the deal was still contingent on other major producers agreeing to join in, which could complicate efforts.
Saudi Arabia, Opec’s de facto leader, has consistently said it will not restrict output without the largest producing countries also curbing production, including those inside the cartel like Iran and Iraq, as well as big producers outside the group like Russia.