Saudi Arabia, Russia, Qatar and Venezuela, on Tuesday, February 16, said they would not increase crude production output above January’s levels as long as other major oil producers followed suit, in the first coordinated move to boost oil prices in years.
The agreement was struck after a short meeting in Qatar, but it came with a significant caveat: Iran and Iraq must also halt production increases. Iraq’s production has soared to record levels as it furiously pumps to generate revenue to fight a war against Islamic State, while Iran is trying to ramp up output now that western sanctions over its nuclear program have ended.
The pact still marked a significant departure for Saudi Arabia and the Organization of the Petroleum Exporting Countries after more than a year of letting oil prices CLJ6, +0.52% fall to their lowest levels in more than a decade. A production “freeze” represented a compromise with countries like Venezuela that have wanted an outright cut to bring supply back into line with demand.
“Freezing now at the January level is adequate for the market,” Saudi oil minister Ali al-Naimi said. “We don’t want significant gyrations in prices, we want to meet demand. We want a stable oil price.”