On Thursday, crude oil prices gained during early Asia trade, as market participants reacted to Iran’s support of an idea to freeze oil production. That’s undoubtedly the first positive step to stabilize oil prices, although Iran itself is reluctant to comply.
Taking into account Iran’s refusal to cap its production beyond January levels, agreed by four main oil producing countries this week, a question arises whether the agreed parties, including Qatar, Russia, Venezuela and Saudi Arabia are going to stay committed to this plan or not.
Crude futures for March delivery on the New York Mercantile exchange showed a 1.7% leap, trading at $31.19. To add to this, in London April Brent crude futures gained 1.3% at $34.94 a barrel.
The recent rally clearly shows the whole nervousness in the global financial markets, though the agreement doesn’t do anything to cut the oil flow.
A collective production freeze or cut carried out by the OPEC members and Russia could potentially help to rebalance the prolonged mismatch in demand and supply and raise crude prices. However, many market analysts point out that there’s nothing surprising in Iran’s unwillingness to cut production.