Oil prices failed to hold their rally today as it is retreating from its early day highs, losing 3%. Though in green, the commodity is quickly inching down as the world’s two largest oil producers could only agree over the freezing of output at current levels, disappointing hopes of a bigger supply cut.

Supply freeze

Four oil producers, i.e., Russia, Saudi Arabia, Venezuela and Qatar met in Doha today to discuss a harmonised production cut. However, the meeting saw producers tentatively agreeing over freezing output at January levels, which in itself is considered as record high supply. At the same time, the oil exporting nations agreed to such halt only if other suppliers such as Iran and Iraq work in tandem to them.

Following the meeting, Brent Crude fell from day’s highs to $34.01, which is up 1.86% from previous day’s close. West Intermediate Texas too dipped below $30 level, showing a 1.12% gain over the previous session.

No Definitive Change Yet.

Oil market participants were not excited over the outcome as it was widely expected that the nations will take a firm step towards controlling oil prices. Saudi Arabia’s oil minister Ali al-Naimi said that the events and situations that unfold following the meet will decide if more measures are required to balance the market.

But, Energy Aspects analysts are of the view that Russia, Iran and Iraq should act themselves without expecting much from Saudi Arabia, which is not in the habit of taking unilateral decisions. On the other hand, some experts are considering the meeting as a precursor to bigger supply cuts in future, if other nations join hands. Also, there are expectations that if oil countries agree to work together then, oil can bottom out to resume its recovery soon.

Simultaneously, there are growing beliefs that the expenditure cut by many oil companies will force them to cut production, which will be another reason in favor of oil price rise.