UAE oil minister says output freeze already in place

The United Arab Emirates says it has already put in gear a plan agreed to by a number of major oil producing countries to freeze their output level in order to reduce global market glut.

Speaking to reporters in Abu Dhabi on Monday, Emirati Oil Minister Suhail Mazrouei said that current market prices gave forced most producers to freeze their oil production levels, insisting that it made "no sense" to pump more crude, AFP reported.

"Current prices are forcing everyone to freeze. So I think it is happening as we speak," Mazrouei said, adding, "It does not make any sense for anyone to increase production at current prices."

Mazrouei further noted that he was aware of talks to hold a meeting between oil producers from the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, adding that he has not received an invitation yet.

"We hear about a meeting. I have not received an official invitation for an OPEC and non-OPEC meeting," he added.

"If there is an invitation, the UAE is always cooperating within OPEC," he said, adding that the organization should first hold talks to decide on whether to take part in such a meeting.

Back in February, oil ministers from Venezuela, Qatar, Saudi Arabia and Russia met in Doha to discuss ways to stabilize the tumultuous oil market. They announced at the end of the meeting that they had agreed to freeze output in a bid to shore up prices after a 70 percent drop due to chronic oversupply.

A day later, oil ministers from Venezuela, Iraq and Qatar met with their Iranian counterpart, Bijan Zangeneh, in Tehran, to discuss oil market conditions.

Zangeneh told reporters after the meeting that an understanding had been reached at the end of the talks for OPEC and non-OPEC oil producers to keep their current output ceiling to help stabilize the market and boost the prices.

Zangeneh, however, vehemently rejected any possibility that Iran would stop increasing its oil production, describing any request on Tehran to that effect as “a joke.”

“Some countries that are producing above 10 million barrels per day (bpd) have called on Iran to freeze its production at one million bpd,” Zangeneh said in what appeared to be a reference to Saudi Arabia.

“This is more like a joke that they tell us they would freeze their production above 10 million barrels per day and that we should also in turn freeze our production at one million barrels per day,” he said in a speech to an expert energy panel in Tehran. 

A few days after Tehran’s four-sided meeting, Russia’s Energy Minister Alexander Novak told reporters that if major oil producers agreed on an oil output freeze, this measure would help decrease current overproduction that has glutted global markets.

“If there are no additional supplies, then this imbalance and overproduction will decrease at a minimum rate of 1.3 million barrels per day,” Novak said, adding, “It will be a positive signal which is clear for the market of what will happen and not violate any market principles.”

Novak stated that Iran had a constructive attitude toward the proposals made for an oil production freeze, but had not expressed readiness to join the arrangements.

Oil market analysts say due to overproduction, chiefly by Saudi Arabia and non-OPEC producers, there is currently up to 2.5 million barrels per day of excess oil in the market, which has caused crude prices to lose around 60% of their value since mid-2014.