Half of global oil glut may disappear if output deal works

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| Last Updated: Feb 19, 2016, 18:00 PM IST
Half of global oil glut may disappear if output deal works

Russia`s First Deputy Energy Minister Alexey Texler said on Friday that the global oil market was over supplied 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.

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.

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

"Any country may join in the deal. But we are realists. Not every country will", Texler told reporters on the sidelines of an economic forum in Krasnoyarsk, Siberia.

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