Brent crude futures are reportedly falling this morning in light of market skepticism that a looming deal to freeze crude oil production can help to clear the global supply glut.
The continued talks of a production freeze are not an April fool's joke.
They are in follow-up to a pact made in February among Saudi Arabia, Russia, Qatar and Venezuela to freeze their output in an effort to bring supply back in line with demand. The "freeze" would not be a true "freeze" – it is reportedly a freeze at the January level.
An article in Forbes yesterday, "What The Conventional Wisdom Gets Wrong About The Oil Freeze," analyzed the potential oil freeze in depth.
The article discusses, and we agree, that the conventional wisdom is mostly right about the oil freeze in terms of market fundamentals and in anticipating that Iran would be unlikely to participate.
There is an upcoming meeting on April 17 in Doha, Qatar where oil producers reportedly plan to discuss a global pact to freeze production to support prices. Qatar holds the OPEC presidency in 2016 and has been organizing efforts to stabilize prices by freezing production. Of the 15 OPEC and non-OPEC producers expected to attend the upcoming meeting, 12 countries have confirmed their attendance including Iran, although Iran has stated publicly that it will not freeze production.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
