Quoted from DUBAI / LONDON (Reuters) - OPEC is
very unlikely to cut production at its next meeting in June, even if prices
remain very low, according to OPEC sources and delegates, because it would be
too early to say how quickly Iran increased output.
The source, which includes officials
from the Middle East, said the OPEC countries like Saudi Arabia also wanted to
test Russia's commitment to a freeze output before taking further steps to
stabilize prices.
More than 18 months after oil prices
began a steep slide due to oversupply, Saudi Arabia, Qatar, Venezuela and
non-OPEC Russia agreed last month to freeze output at the rate of global oil
pact January first in 15 years.
Saudi Arabian Oil Minister Ali
al-Naimi said last week cut the supply is not on the cards though adding that
the freeze of production is only the first step to balancing the market after
prices fell to the lowest since 2003.
"Maybe at the end of the year
(cuts could be possible) when it is absolutely clear that Iran is actually
producing the volumes they are talking about. But not in June, "a source
from one of the Middle East OPEC producers said.
January is the peak or near-peak
production for Russia and Saudi Arabia, two major oil exporter, but Iran - OPEC
producers 3 - is the main supply uncertainties for 2016 as raise output after
the lifting of Western sanctions in January, adding barrels to the market is
already saturated.
Over the past month, Iran has issued
contradictory statements saying it could add up to 1.5 million barrels per day
next year that will disrupt the market skepticism field damaged by years of
sanctions. Meanwhile, exports in February had been disappointed because
European buyers are careful to immediately boost trade amid the rest of matter
dollar excise and boat insurance.
"No one in OPEC knows what
happened to the Iranian field. So Saudi wants to see what happens in reality,
"a source at one OPEC delegate familiar with the production freeze the
negotiations, said.
NO SPECIFIC TERMS
Non-OPEC Oman and several OPEC
sources have floated the idea of Iran are freed from the output freeze - like
Iraq in the past when the country was subject to international sanctions - but
so far Tehran has not offered specific terms, according to OPEC sources.
Iranian Oil Minister Bijan Zanganeh
said last week freezing production is "ridiculous" while Iranian
source said the country would be ready to discuss the pact production after
output reached the pre-sanctions level.
Analysts believe output and exports
could rise up to 0.7 million barrels per day to around 3.5 million barrels per
day in the next months but it will take time to understand where the real
figures stand.
Iran, for example, have said OPEC
was pumping 3.4 million barrels per day in January - an amount far higher than
predicted by OPEC observer.
In June, when OPEC holds its next
meeting, Iran will export picture remains unclear, several OPEC sources said,
adding that they may only have reliable numbers for April. Sources also said it
would be premature to say in June if oil stocks world record finally be
shrinking.
Saudi Arabia and Russia did not say
freezing output will be canceled if Iran refuses to join, leave room for
potential compromise.
Russian Energy Minister Alexander
Novak plans to travel to Iran, a close ally of Moscow, in March for further
discussion of freezing production, which he said could last for one year.
COMPLIANCE WITH RUSSIA
If Russia respect the output freeze,
it would be a major departure from the policy of the former. The only time
Russia agreed to cooperate with OPEC in 2001 but never delivered on his promise
and lift export instead.
It was a big disappointment for
Naimi, who set the 2001 agreement, and still wary of approving any risks of
fraud by Russian or fellow OPEC members.
"Even if they say that they
will cut their production will not do. There is no point wasting time looking
for a reduction in production, "he said last week.
But in the opinion of loyal viewers
OPEC output agreements signal a change in tone for the freezing of Saudi
Arabia, of the view that the market will balance itself to one where he may
need encouragement. "Eventually, we will have a decline in
production," said one OPEC delegate, declined to be identified.
Others urged faster action. former
Qatar's energy minister Abdullah al-Attiyah, who was still talking to the
producers inside and outside OPEC, said the wound was necessary before it
becomes unmanageable glut.
By Rania El Gamal and Dmitry Zhdanov