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Saudi-Russian Pledge To Freeze Oil Production May Be Smoke And Mirrors

Suzie Neuwirth, City A.M.

Stop press!! Saudi Arabia and Russia have agreed to freeze oil output!!

Iraq Signs Contracts With Foreign Oil Companies

Iraq is unlikely to capitulate to Saudi and Russia’s demands to freeze output (Source: Getty)

At first glance, the remarks at today’s meeting in Doha were hugely significant, coming both from the notoriously stubborn leader of the Opec cartel and one of the largest non-Opec producers in the world.

Opec members Qatar and Venezeula, who were also at the meeting, have also pledged to freeze production, although any deal is conditional on other players participating.

Could this mean the end of the oil price rout that has blighted the sector for the past 18 months, now that such major producers have indicated that output will not rise?

But look a little closer and this might be more of a tremor than an earthquake on the richter scale of exciting energy news.

The market clearly isn’t impressed – the price of brent crude soared by six per cent in early trading to more than $35 on hopes of a deal, but came crashing back down again after the announcement.

The main concerns hinge on the fact that it depends on other parties agreeing and that Saudi Arabia and Russia will be freezing output at near-record levels, rather than cutting it.

Getting Iran – notably absent from the meeting – to agree to cut production so soon after the West lifted its sanctions could be tricky to say the least.

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