An extreme lack of progress from the crude production freeze proposed by Saudi Arabia and Russia last week has driven crude and refined products down this Tuesday morning. This plan will only be realized if other majors such as Iran and Iraq decide to join. Neither has committed, which is leaving the freeze plan in peril. It was actually reported by Iranian media today that Iran’s Oil Minister called the proposed freeze “a joke.”
Saudi Oil Minister Ali Al-Naimi explained the reasoning behind the potential freeze of January levels: “The reason we agreed to a potential freeze of production is simply the beginning of a process” over the next few months, Naimi told reporters. “We don’t want significant gyrations in prices. We don’t want a reduction in supply. We want to meet demand. We want a stable oil price.” It’s interesting that the head of Iran’s National Oil Company has revealed that the company hopes that its newly minted petroleum contracts will help it secure deals worth $10 billion-$15 billion with international oil companies in the six months leading up to March 2017. Is it possible for Iran to reach the production levels of Saudi Arabia and Russia in the next couple of years?
As for the drop-off today, as of 12:15 a.m. ET, diesel is down $.0330, gas down $.0350, and crude has fallen to $31.84/bbl from a high of $33.53, down $1.56 on the day.
- Reiterating from above, Iran expects to clinch oil deals worth up to $15 billion in the six months leading up to March 2017
- Flows along Kurdish oil pipeline to Turkey suspended until at least February 29
- UK oil lobby warns that North Sea investments could fall below £1 billion this year
- German Q4 2015 GDP confirmed at a modest +0.3% as investor morale dips to a 14-month low. Here is a chart showing the barrels per day each country produces, as of October 2015.
Here is a bar chart showing the barrels per day each country produces, as of October 2015. The bars that are in red are countries agreeing to fix production.