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Qatari energy minister Mohammad bin Saleh al-Sada told a news
conference that the step would help to stabilize the oil market,
which has experienced price declines not seen since the early
2000s because of the pace at which supply has outstripped
demand.
Analysts said while the decision is a step in the right
direction to bring supply and demand back into balance, global
inventories remain near record levels and are likely to dampen
any price rallies.
"I don't think it will have a huge impact on supply/demand
balances, simply because we were oversupplied in January anyway.
We’re just even more oversupplied now," Energy Aspects analyst
Dominic Haywood.
"So in that regard it’s not huge but it’s a step in the right
direction. But you’ve still got a huge amount of inventory that
is going to weigh on the price for a long time and we need to
clear that, because it’s going to kill any rally."
The oil ministers of Russia and Venezuela attended the meeting
in the Qatari capital, together with Saudi oil minister Ali al-Naimi,
who said the group's next steps would be assessed over the
coming months.
Brent crude futures <LCOc1> were up 53 cents at $33.92 a barrel
by 1135 GMT, having fallen from an earlier peak of $35.55, the
highest price since Feb. 4.
U.S. crude futures <CLc1> were up 33 cents at $29.77, off the
day's high of $31.53.
Oil prices have fallen by more than 70 percent in the past 20
months, driven down by near-record production both from OPEC
members and other producers, such as Russia.
The drop in the oil price has eroded the finances of even the
more affluent oil-producing nations, forcing governments to cut
spending, increase deficit forecasts, borrow more and push
through politically unpopular reforms.
Sources familiar with Iranian thinking on supply said Tehran
would be willing to consider a freeze once its output had
reached pre-sanctions levels.
"The output freeze is disappointing because it's not an outright
cut and with Iran not a part of the meeting it’s still a bit
far-fetched to think this is a precursor to a future cut. Iran’s
absence from the meeting means overall OPEC output should still
rise," CMC Markets analyst Jasper Lawler said in a note.
(Additional reporting by Osamu Tsukimori and Aaron Sheldrick;
Editing by David Goodman, Greg Mahlich)
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