- February 16, 2016
- Posted by: Art Berman
- Category: The Petroleum Truth Report
The oil production freeze announced Tuesday by a few OPEC members and Russia is not a cut and is largely meaningless. It does not include Iran and Iraq. It apparently only includes Saudi Arabia, Russia, Venezuela and Qatar.
What is it really? A largely empty and cynical gesture that will almost certainly result in another “head-fake” price increase that won’t last. This will boost OPEC revenue temporarily.
Saudi oil minister al-Naimi said the agreement to freeze production at January levels was “potential and preliminary,” meaning that nothing will happen unless other countries join the accord.
It is important that Russia was involved. It is more significant that Iraq, whose production growth has been the largest in OPEC, and Iran, whose renewed export will become the largest growth in OPEC, were not involved.
At this moment, it is unclear that anything substantive will result from this announcement, although any movement at all must be taken as somewhat positive.