Russia, Saudi Arabia, Venezuela and Qatar have agreed to freeze production levels at January levels provided that others, mainly Iran, agree to do the same. Although freezing production is certainly better than an increase, it still isn’t a production cut. Further, you can see from Bloomberg's graph below that some countries, specifically Saudi Arabia, were at an increased level in January over December – making the freeze at the higher output. The news has the market pulling back from Friday's gains.
The freeze discussion came after Iran’s first export to Europe in over 3 years occurred on Monday. Monday’s tanker was carrying over 2 million barrels. It is followed by another carrying 1 million barrels scheduled for next Tuesday. According to an OPEC delegate this “changed everything.” The European market was previously supplied by Saudi Arabia and Russia, but Iran has lowered its prices to compete and earn back its market share. The Iranian oil has impacted already-struggling crude prices, which have dropped more than 70% since their summer of 2014 peak of $114/bbl.
As a reminder, due to the holiday the API and DOE stats are delayed a day and the settles remain the same as friday.