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Oil Slides After Saudi Arabia & Russia Agree to Freeze Output

February 16, 2016 at 18:35 by Vladimir Vyun

Crude oil dropped after Saudi Arabia and Russia agreed to freeze production at January levels. Qatar and Venezuela also joined the agreement. It was the first deal in 15 years between OPEC and non-OPEC oil producers. Saudi Oil Minister Ali Al-Naimi told reporters:

The reason we agreed to a potential freeze of production is simple: it is the beginning of a process which we will assess in the next few months and decide if we need other steps to stabilise and improve the market. We don’t want significant gyrations in prices, we don’t want reduction in supply, we want to meet demand, we want a stable oil price. We have to take a step at a time.

Markets were not impressed by the news. They were expecting cuts, not keeping output at the same level, which was close to the record highs anyway. Besides, Iran may be an obstacle as it has just recently started exporting oil to the West and unlikely to join the deal.

March futures for WTI crude oil declined 0.88 percent to $29.18 per barrel as of 18:29 GMT on NYMEX today. April contract for Brent crude plunged as much as 2.73 percent to $32.48 per barrel on ICE.

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