There appears to be some hope that production of oil will lessen and that it would result in stabilization of the beleaguered oil price. Qatari Energy Minister, Mohammad bin Saleh al-Sada, told the media that steps would be taken by the four largest oil producers to freeze output levels as of January. However, his offer is contingent upon the fact that others major experters do the same. But that failed to cheer the market as the Bren crude oil futures shed the gains following the news.
Four Biggest Oil Producers
Aside from Qatari, the other three participants were Saudi Arabia, Russia, and Venezuela. The four nation’s leaders held a meeting in the Qatari capital to discuss the oil market situation and the demand for reducing the production. The group indicated that its next course of action would be reviewed in the upcoming months.
Since early 2000s, oil price has been witnessing an uptrend and even hit $150 a barrel level in 2007 – 2008 period though it later stabilized somewhat. However, the crude oil price started witnessing a steep drop as of September 2014 as supply increased.
First Supply Management Decision
Petromatrix analyst Olivier Jakob, said that the four nation’s decision was the first supplement management decision since November 2014. While stating that it was a major shift in policy on the matter, there are bound to be others who would feel that it was not a production cut to cheer about. However, it was a fact that the oil-dependent governments in the Middle East were forced to cut spending and borrow. As a result, the establishments in the region were also forced to initiate some unpopular reforms.
It was the initiative of Venezuela’s Oil Minister that the four-nation meeting was held on Tuesday. The Oil Minister visited some big producers to get the widespread support for his proposal for production freeze at the current levels. That might ensure the region maintains its current market share that they were also concerned about.