Oil prices fall further after Saudi comments

Oil prices fell further on Monday, extending the over 4 percent drop from late last week after Saudi Arabia’s deputy crown prince said the kingdom will not freeze production unless other members, including Iran, agree to do so.

Front month Brent futures are down 34 cents to $38.33 a barrel while U.S. West Texas Intermediate (WTI) crude futures were 43 cents lower at $36.36 per barrel.

Oil producers, including Russia, are scheduled to meet in Doha on April 17 to discuss production and output freezes.

At a meeting in February between Saudi Arabia, Qatar, Russia and Venezuela, the producers agreed to cap their output at January’s level.

That deal helped lift the price of Brent above $40 a barrel from a 12-year low of $27.10 in January.

Now with Saudi Arabia saying an output freeze would depend on Iran taking part, the forthcoming meeting looks unlikely to produce any accord.

“The deal has always appeared dead in the water despite the fact that OPEC minnows have flocked to it, from Iran never entertaining the deal. The Saudi interview suggests it is not interested,” analyst Evan Lucas at IG Markets wrote in a note.

According to the International Energy Agency, Iran produced 3.22 million barrels a day in February, its first full month of production after the nuclear sanctions were lifted.

Iran’s oil minister, Bijan Zanganeh, has said he would attend the Doha discussions without indicating he has any plans to agree to an output freeze.  In February, he called the proposal to freeze oil production at January levels “a joke,” as Iran was looking to increase output post-sanctions.  

Write to Brinda Darasha at brinda.d@argaamplus.com