After repeatedly deciding to sit tight and endure the pain of falling crude prices, OPEC’s members sat down with delegates from petrostates outside of the cartel in Doha this spring to discuss the possibility of placing an upper limit on production. This “freeze,” as it was called during the months-long hype before the summit, never came to pass after Saudi Arabia backed out at the last minute. Riyadh was concerned about Tehran’s lack of participation in the freeze, unwilling to constrain its own output while its regional rival was busy ramping up its own in the wake of the lifting of Western sanctions. But now, four months later, the more cash-strapped oil-producing countries of the world are once again agitating for some sort of agreement, hoping that even if it’s just a freeze, that might help boost prices up and ease fiscal pain.But Russia remains of the biggest question marks hanging over any potential round two. Will Moscow be as willing to sign on as it was back in April? As Bloomberg reports, Russia’s Energy Minister seems amenable:
Russia is open for talks with other major oil producers on freezing output as the market is unlikely to balance until next year, Energy Minister Alexander Novak said in an interview with Asharq Al-Awsat. […][April’s talks] showed that producers can at least work together, Novak said, according to Asharq Al-Awsat. Russia is open to “joint measures” since the current cycle of low crude prices is unlikely to end until late 2017, he said.
The Saudis have made similar positive gestures towards this plan, now that Iran is close to its pre-sanctions levels and might similarly be on board. If these petrostates do agree to meet about a freeze again, they’ll do so with what looks to be a greater likelihood for consensus, but let’s not forget: an upper limit won’t immediately erase the glut that led to crude’s price collapse.