By Isaac Cohen*
There was great expectation about the weekend meeting, in Doha, Qatar, of 18 oil producers representing almost half of world production. Russia and Saudi Arabia, the two major producers, were there, making credible the possibility of achieving an agreement to freeze production levels. However, the notable absence of Iran became the roadblock to such an agreement. According to press reports, Iran’s absence meant the freeze agreement would not be approved by all the members of the Organization of Petroleum Countries, as required by Saudi Arabia.
On Monday, financial markets were down, but regained strength at closing and oil prices remained around $40 per barrel, because March production levels remained unchanged. Russia still is the major world producer, with almost 11 million barrels per day and Saudi Arabia comes second with 10.19 million. It was the agreement in February among these two giants, to freeze production at January levels, which contributed to stabilize oil prices at around $40 per barrel, after they reached $27.
Also contributing to price stability is the decrease in oil production in the United States. According to the Energy Information Administration, in March, US oil production decreased 90,000 barrels per day, from February. Additionally, the agency forecasts US domestic oil production will be cur this year to 8.6 million barrels per day and to 8 million in 2017.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.