Crude price in international markets continued to be doubtful about the new production limiting decision by Saudi Arabia and Russia. The two largest producers whose income considerably depends upon oil reached to limit production at January 2016 levels.
Despite the vocal support for the deal from Iran, prices remained stagnant at $35 Dollar for the Brent variety after rising initially to the production limit news.
Increased stockpile data from the US has caused downward pressure on Friday trading.
Industry experts say that though the deal between Saudi and Russia- the two major producers within and outside OPEC; what matters is Iran’s stand. Iran which has reentered into the international market after the withdrawal of US led ban is firm on realizing its pre-sanction output of 4 mn barrels per day.
Iran holds the mantle to lead the price in the international market in the new environment. Any production cut by Russia and OPEC will be filled by a thirsty Iran. Analysts predict that the Persian Gulf power will not contribute to production cutting rather will increase its production whatever may be the price.
After the Saudi-Russia deal, Iran has extended its support for efforts to revive the price. Its oil minister Bijan Zanganeh said the country “backs any measures which help stabilise the market”.
Oil prices have recorded a 14% increase in the first half of the week deriving energy from the new deal. But developments towards the end of the week show that the Saudi- Iran deal is weak to support oil since it doesn’t include Iran.