Freezing Oil Output Can Curb Half of Global Glut

Freezing Oil Output Can Curb Half of Global GlutFreezing Oil Output Can Curb Half of Global Glut

Russia's First Deputy Energy Minister Alexey Texler said on Friday the global oil market was oversupplied by 1.8 million barrels per day, but that half of that glut could disappear if an output freeze deal worked.

Even if Iran did not agree to join the deal, which is being proposed by Saudi Arabia, Russia, Qatar and Venezuela, Texler said there would still be an effect on the market, Reuters reported.

Leading OPEC member Saudi Arabia, non-OPEC member Russia, Qatar and Venezuela this week agreed to freeze output at January levels if others joined in. Iran welcomed the move but stopped short of pledging to act itself and it is unclear whether the freeze will actually happen.

Calling the agreement "useful and necessary", Texler said he thought Iran should be interested in joining the pact because it would help Tehran secure a better price for its oil.

He also said Russia would increase its own oil production by 1.5% in 2016 and that a price level of $35-40 per barrel would allow the Russian oil industry to move forward.

The statement comes as Saudi Foreign Minister Adel al-Jubeir said on Thursday the kingdom is "not prepared" to cut oil production, its foreign minister said on Thursday, after the top exporter agreed with Russia to freeze output if major rivals follow.

"If other producers want to limit or agree to a freeze in terms of additional production, that may have an impact on the market but Saudi Arabia is not prepared to cut production," Jubeir said.