On Wednesday, oil price saw a considerable fall from the previous sessions after Saudi Arabia ruled out production cuts. The industry data also showed a build in US crude stocks.
However, Iran on the other side has made it a point that it will not restrain the production of oil after the international sanctions against it were lifted. It further called the joint Russian-Saudi proposal of output freeze, ‘laughable’.
Bijan Zanganeh told the Iranian news agency ISNA that some of Iran’s neighbours have increased their production to 10 million barrels a day in recent years and export this amount, and now they have the nerve to say everyone should freeze production together. While they freeze their production at 10 million barrels, Iran is to freeze at 1 million barrel, which is a laughable proposal.
The falls in U.S. West Texas Intermediate (WTI) crude futures and International benchmark Brent futures were due to lack of cooperation between Organization of the Petroleum Exporting Countries (OPEC) members. They were unable to decide whether to freeze or cut production to control oversupply that has kept the prices low by 70 per cent since 2014.
Saudi Arabia’s oil minister Ali Al-Naimi was of the view that a coordinated production cut by OPEC and non-OPEC exporters was not something that would happen because not many countries are going to deliver.
Russia, a non-OPEC member has tentatively agreed on freezing its output at January levels, which was when they hit a post-Soviet record.
To cope with falling oil revenues, even poorer OPEC nations like Nigeria have been forced to adopt austerity measures.