Share

Brent trades near $32 as focus turns to Tehran

Hong Kong - Brent oil traded near $32 before a meeting between Iraq and Iran in Tehran after Saudi Arabia and Russia agreed to freeze production at near record levels amid a global glut.
 
Futures in London were little changed, giving up earlier gains of as much as 2%. Iran’s Oil Minister Bijan Namdar Zanganeh will meet with counterparts from Iraq, the second- biggest OPEC producer, and Venezuela on Wednesday, the Iranian news agency Shana said.

The preliminary deal to fix output at January levels is the “beginning of a process” that may require “other steps to stabilize and improve the market,” Saudi Oil Minister Ali Al-Naimi said in Doha.

“Iraq and Iran are the two countries that are going to contribute to growth from the  Organisation of Petroleum Exporting Countries (OPEC) nations this year,” Richard Gorry, managing director at JBC Energy Asia in Singapore, said in a Bloomberg Television interview.

“Getting an agreement from these is going to be very difficult, particularly in the case of Iran. I wouldn’t expect oil to breach $40 until we get into the second half of the year, that’s simply because we’re massively oversupplied.”

Oil has dropped about 25% since the OPEC effectively abandoned output targets at a meeting in early December.

Iran, the second-biggest member of OPEC before sanctions were intensified in 2012, is seeking to boost production by 1 million barrels a day and regain market share after penalties were lifted. The nation has loaded its first cargo to Europe, while Chinese and Spanish companies have also booked shipments.

Brent for April settlement traded at $32.05 a barrel on the London-based ICE Futures Europe exchange, down 13 cents at 2:14 p.m. Hong Kong time. The European benchmark was at a premium of $1.01 to West Texas Intermediate for April. Total volume traded was about 55% above the 100-day average.

Freezing output

WTI for March delivery was 11 cents lower at $28.93 a barrel on the New York Mercantile Exchange. The contract fell 40 cents to settle at $29.04 on Tuesday. Prices sunk to a 12-year low this month after falling 30% last year.

Iran will “not forgo its share of the market,” Zanganeh said on Tuesday, according to Shana. The nation pumped 2.86 million barrels a day in January, making it the fifth-biggest producer in OPEC, according to data compiled by Bloomberg. Iraq is ready to join Saudi Arabia in freezing output, or even cut, if others commit to the accord, said an official who asked not to be identified because oil policy is private.

Venezuela, which will join the pact with Qatar, has lobbied exporters including Russia, Iran and Saudi Arabia to arrange a meeting between OPEC members and other suppliers in an attempt to reach an agreement to balance the market. The freeze is conditional on other nations agreeing to participate, Russia’s Energy Ministry said in a statement.

Saudi production

Saudi Arabia pumped 10.2 million barrels a day in January, according to data compiled by Bloomberg. Russian output of crude and a light oil called condensate climbed 1.5% last month from a year earlier to 10.9 million barrels a day, a post-Soviet high, according to a unit of the country’s Energy Ministry.

The slump in oil prices is affecting producers across the globe. Devon Energy is reducing its workforce by 20% in the first quarter while slashing its quarterly dividend to 6 cents a share from 24 cents, according to a statement on Tuesday. It also expects 2016 capital spending between $900m and $1.1bn, down 75% from a year earlier.

Woodside Petroleum, Australia’s second-largest oil and natural gas producer, reported a 99% decline in full-year profit, its worst result in 13 years. Net income sank to $26m from $2.41bn a year earlier, Perth-based Woodside said on Wednesday.

Chief executive officer Peter Coleman is skeptical oil will recover this year and said the company is planning for a $35 price through 2017.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.90
+0.2%
Rand - Pound
23.84
+0.3%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.31
+0.3%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders