Any optimism from a deal announced between Saudi Arabia and Russia to freeze oil production at January's record high levels has quickly evaporated, as Iran suggests it could yet ramp up its recently available output back to pre-sanctions levels. As Joel Flynn reports, that could push critically low oil prices down even further.
For months Saudi Arabia's oil production had remained stable - even in the face of a crushing collapse in crude prices. The Saudis had been trying to ride out low returns - the cost of crude currently around 30 dollars a barrel. To stop them going any lower though, Riyadh agreed with Russia to freeze output. That deal only works if other big exporters follow suit though, and Iran looks increasingly like it won't, as talks with fellow OPEC members get underway. Ipek Ozkardeskaya is from London Capital Group. SOUNDBITE: LCG Market Analyst, Ipek Ozkardeskaya, saying (English): "I believe that Iran is going to be pushing and pressuring Saudi Arabia and, you know, continuing to do whatever it was planning to do before this whole setting got this dangerous. I do not believe that Iran will be willing anytime soon to agree in order to, you know, they are not going to be willing to leave the game before they start it." Tehran's OPEC envoy has reportedly said a production freeze for the country would be illogical. That won't stop fellow OPEC members from trying to convince the country to join the first global oil pact in 15 years. But even if Iran agrees, global supply is still at record levels - and markets want cuts, not freezes. SOUNDBITE: LCG Market Analyst, Ipek Ozkardeskaya, saying (English): "As long as Saudi Arabia continues running I do not see any agreement that would come through to satisfy the market, or at least convince the buyers to jump back in the oil market." Oil prices have fallen more than 70 per cent in just under two years. And it seems there's no end in sight for the problems that's causing the global economy.