OPEC is very unlikely to cut oil output at its next meeting in June, even if crude prices remain extremely low, according to OPEC sources and delegates speaking with the Reuters news agency.
Saudi Arabia, Qatar, Venezuela and non-OPEC member Russia agreed last month to freeze output at January levels, but only if others do the same.
Iran – which is just now able pump and sell more crude after the lifting of international sanctions – has not said it will take part in the pact and has given conflicting statements about its plans.
And by the June OPEC meeting it will still be too early to say how fast Iranian output is rising.
“No-one at OPEC knows what’s going on with Iranian fields. So the Saudis want to see what happens in reality,” a source in one of the OPEC delegations who is familiar with production freeze negotiations, told Reuters.
Saudi Arabia and Russia have not said the output freeze would be void if Iran refuses to join in, leaving room for a potential compromise.
Russia’s Energy Minister Alexander Novak plans to travel to Iran, Moscow’s close ally, in March for more talks on the production freeze, which he said could last for as long as a year.
Saudi Arabian Oil Minister Ali al-Naimi said last week that actually cutting output was not on the cards, although he added that the production freeze was only the first step to balance the market after prices fell to their lowest since 2003.
January was peak or near-peak production for Russia and Saudi Arabia, the world’s two top oil exporters, but OPEC’s total crude production slipped in February.
A Reuters survey showing OPEC production was down from the highest monthly level in recent history, easing concerns that a global supply glut was worsening.