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Draft agreement in Doha stipulates output "freeze" until October

April 16, 23:46 UTC+3
On April 17, the oil producing countries will be discussing the ‘oil freeze’ at a meeting in Doha
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©  AP Photo/Achmad Ibrahim

DOHA, April 17. /TASS/. A draft agreement of the oil producer countries expected to be signed in Doha on April 17 stipulates that the output will be frozen at the level of January 2016 until October, Azerbaijan's Energy Minister Natiq Aliyev said in an exclusive interview with TASS on Saturday on the eve of a major off-schedule conference of OPEC and non-OPEC oil producing nations.

"The draft agreement is not large," Aliyev said. "It is as follows: the states gathering in Doha have reached a conclusion that for normalizing the oil price they agreed to freeze the output at the level of January 2016 until October."

Doha deal to be "gentlemen-like"

An agreement in Doha to freeze oil output will be "gentlemen-like" as the draft stipulates no control mechanisms, Aliyev went on to say.

"The agreement is gentlemen-like as the countries realize that the maintained norms of output will suit the joint interests. It does not envisage any control mechanisms and each country should observe its implementation," Aliyev said, adding that he had not received any proposals to create a special supervisory body for monitoring the fulfilment of obligations.

"There is no need in a supervisory body," he said. "No proposals have come since it will have no influence on the countries."

Azerbaijan set to seal deal with other oil producing countries

"We are ready to sign the agreement in a form that we have seen," Aliyev said. "We have a complete understanding with Russia, as well as mutual goals and interests."

"We believe that all the delegates who arrived in Doha are set to sign it, or why then they came here, otherwise," he said.

Oil price to climb slowly to $50 per barrel

The oil price will be climbing up slowly but persistently to $50 per barrel by the end of 2016 after big oil producer countries seal a deal in Doha, Azerbaijan's Energy Minister Natiq Aliyev told TASS on Saturday.

"The higher is the price the better," Aliyev said. "But we expect that it will be slowly and gradually increasing towards $50 per barrel by the year's end. The next year we will be satisfied with the price of $60 per barrel."

On April 17, the oil producing countries will be discussing the ‘oil freeze’ at this January level at a meeting in Doha. Earlier, a majority of oil producer counties confirmed their participation.

Oil prices, which plunged below $30 per barrel at the beginning of the year, had pushed for the talks as the declining prices imperiled the budgets of some of these countries. The oil price has been climbing in recent days in the wake of expectations that the states would be capable of sealing the deal to freeze the oil production.

The Brent oil has been trading at a 65% higher price since the beginning of the year. Moreover, the oil price has begun surging since February 16 after the first agreements reached by oil producer countries to "freeze" the oil output.

OPEC may offset increase of crude oil output in Iran

OPEC may offset the increase of crude oil output in Iran up to 4 million barrels a day by revising the general quota of the oil cartel.

"Since Iran is an OPEC member, the problem of an increase of output by one of the member-states can be regulated within the framework of the cartel through a revision of the general quota," he said. "Still far from everyone fell like losing their share. But if other countries agreed to cut down their quotas, redistribution would take place."

Like Russia and Kazakhstan, Azerbaijan is not an OPEC member. All the three countries will take part in the meeting of OPEC and non-OPEC oil producing nations in the Qatari capital Doha on Sunday. Participants in the off-schedule conference plan to sign an agreement on freezing the output of crude at the current level so as to stabilize oil prices.

After the lifting of international sanctions introduced against Iran over its nuclear programme, Teheran hopes to raise the output to 4 million barrels a day from the current 3.5 million barrels and it is unwilling to join the agreement on the output freeze.

In the meantime, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman told Bloomberg on Saturday the kingdom would not restrain is oil production unless other producers including Iran agreed to freeze their output acted in same vein.

Russia in its turn believes that Iran’s abstaining from the agreement is not critical for the implementation of its provisions.

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