OPEC Sees Moderate Oil Bounce Even If Iran Won't Join Freeze

OPEC expects oil prices to rebound to a “moderate” level even if Iran doesn’t join other producers in an agreement to freeze production.

About 15 or 16 nations will attend the freeze discussions in Doha, Qatar, on April 17, Abdalla El-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said at a press conference in Vienna on Monday. While all members of the group have been invited, not all will attend and he didn’t know whether Iran will join in.

Oil prices, which sank to a 12-year low earlier this year, have climbed more than a third since an accord reached on Feb. 16 between OPEC members Saudi Arabia, Venezuela, Qatar and non-member Russia to cap production at January levels. Iranian Oil Minister Bijan Zanganeh has dismissed the proposal as “ridiculous,” given the nation’s plans to boost exports after the lifting of international sanctions.

“We will see who will reply and who will not reply, but I hope it will be a successful meeting,” El-Badri said at the organization’s headquarters in Vienna. Iran has some “conditions” related to its own production and it’s up to them whether they participate in the accord, or even opt to join in at a later date, he said.

The freeze talks are being organized by some OPEC states, rather than the organization itself, El-Badri said. He spoke at the end of an annual dialogue with the European Union, represented by Commissioner for Climate Action and Energy, Miguel Arias Canete.

Saudi Arabia

Saudi Arabia’s oil minister Ali al-Naimi confirmed on March 17 the kingdom will take part in the Doha talks, while people familiar with policy in Kuwait, Algeria and Libya have confirmed they were invited. Nigeria will attend the meeting, a person familiar with the matter said Monday.

Ecuador’s oil ministry, which tried to organize a meeting of Latin American producers earlier this month, didn’t immediately respond to telephone and e-mailed requests Monday for comment. Brazil won’t attend the meeting, the energy ministry said Monday in an e-mailed response. Argentina isn’t planning to send a delegation, Juan Jose Aranguren, Argentina Energy & Mining Minister, said Monday in an e-mail.

El-Badri said he hopes that prices have “bottomed” and will continue to rebound, adding that he expects crude to reach “moderate” rather than “high” levels.

The retreat in production outside the group, and drop in drilling activity in the U.S., shows that OPEC’s strategy to let the market re-balance itself, rather than intervene by cutting its own production, is working, el-Badri said. While inventories remain about 300 million barrels above the five-year average, this surplus will dissipate in time, he said.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Will Kennedy

By: Grant Smith

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