Leaders from Venezuela, Qatar and Iraq met with Iranian oil Minister Bijan Zanganeh yesterday with the hopes of convincing him to join in on the proposed mass production freeze. Although no formal plan was announced, Zanganeh did state that Iran would continue to welcome dialogue with other nations regarding the proposed production freeze.
Currently, there is a lot of misleading news suggesting that Iran definitely wants to and will freeze production. When you dig into the actual facts and statements made, you find that Iran and Iraq have both said essentially that they support anything that will raise prices and they would gladly sell crude at the higher prices – BUT – they have no intention of freezing production at their January levels at this moment in time. Remember that Iran is just beginning to ramp up their production after long term sanctions were recently lifted, so they are nowhere near their pre-sanction levels.
Low oil prices are taking a heavy toll on the economies of countries that rely heavily on revenue from oil exports, such as Venezuela. Venezuela’s economy is in a deep recession, causing the government to raise their subsidized gasoline prices for the first time in 20 years.
The API stocks report, released yesterday, showed a draw in crude oil stocks of -3.3 mill bbls and a draw in distillate stocks of -2.0 mill bbls. Coupling yesterday’s news about Iran with the API stocks report made for quite the rally yesterday and early this morning. However, this rally was short-lived as the DOE stats released today showed that inventories actually increased, with crude building by 2.1 million barrels, gasoline up 3.0 million, and distillates up by 1.4 million. As of 11:50 am ET, crude is flat, gasoline is down a couple cents and heating oil is down just under a penny.