Russia and Saudi Arabia agreed to freeze oil output

The Saudi, Russian, Qatari and Venezuelan oil ministers held a previously undisclosed meeting in Doha to discuss joint measures on tackling a growing oversupply of crude, Reuters reports.

The participants announced the proposal on joint action to tackle a growing oversupply of crude and help prices recover from their lowest levels in more than a decade.

The Saudi minister, Ali al-Naimi, said freezing production at January levels – near record highs – was an adequate measure and he hoped other producers would adopt the plan. Venezuela’s Oil Minister Eulogio Del Pino said more talks would take place with Iran and Iraq on Wednesday in Tehran.

“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 stabilize and improve the market,” Naimi told reporters.

“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,” he said.

Oil prices jumped to $35.55 per barrel after the news about the secret meeting but later pared gains to trade below $34 as expectations for an immediate deal faded.

The fact output from Saudi Arabia and Russia – the world’s two top producers and exporters – is near record highs also makes an agreement tricky since Iran is producing at least 1 million barrels per day below its capacity and pre-sanctions levels.

“We think other producers need to freeze straight away including Iran and Iraq. We believe this step is meant to stabilize the market,” said Qatar’s oil minister Mohammed al-Sada.

Iraq also has long said it expected its production to rise further this year but last month it said it was ready reduce its fast-growing output if all OPEC and non-OPEC members agreed.