Saudi Arabia and Russia to freeze oil output

Saudi Arabia and Russia to freeze oil output
Geopolitical rivals Saudi Arabia and Russia have agreed to freeze oil output, which should stabalise tumbling commodity prices.
2 min read
16 February, 2016
Saudi Arabia and Russia agreed to freeze oil output at January levels [AFP]

Saudi Arabia and Russia have agreed to freeze oil output, which the energy giants hope will stabalise falling oil prices.

Ministers agreed to keep levels at January levels provided other major producers agree.

Saudi Arabia and Qatar's move was backed by their Qatari and Venezuelan counterparts during a Opec meeting in Doha and other oil producers are expected to follow.

"Freezing now at the January level is adequate for the market, we believe," said Saudi Arabia Oil Minister Ali al-Naimi.

"We recognise today the supply is going down because of current prices. We also recognise that demand is on the rise," Reuters reported the minister saying.

Naimi said that further steps might be taken in the coming months to stabalise the oil market.

Saudi Arabia's rival Iran said that it won't relinquish its market share, but could be swayed by the Saudi proposal.

"Fixing a production ceiling was discussed in this meeting and there's room for discussion and examination of this issue," Oil Minister Bijan Zanganeh said.

"One must see what they mean by that. I still have no information of definite results from what was mentioned."

Meanwhile, Qatar's Energy Minister Mohammed bin Saleh al-Sada - who is also acting president of Opec - said the meeting between oil producers had been successful.

"This step is meant to stabilise the market," said Sada, who added that the ministers looked at the outlook for supply and demand in the market.

Sada said talks between Opec and non-Opec producers would begin straight away.

The announcement had an immediate impact with Brent crude oil prices, which rallied to $34.20 a barrel, up 81 cents.

Oil prices have tumbled by 70 percent since June 2014, after oversupply in part due to new US shale oil producers.

Prices have stayed below $30 for much of 2016, as sanctions on Iran are lifted to allow the oil giant to re-enter the global market.