However, the rebounding oil may not last. Zanganeh has not explicitly stated that Iran would keep its output at January levels. Iran had planned to increase output by at least 500,000 a day this year after the lifting of Western sanctions last month, CNBC reports.
“Asking Iran to freeze its oil production level is illogical … when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices … how can they expect Iran to cooperate now and pay the price?” Iranian OPEC representative Mehdi Asali told Shargh newspaper.
Some observers also question the integrity of the countries as some have been known to deviate from the agreements – Russia failed to respect a similar agreement with OPEC producers in the 1990s.
Moreover, Goldman’s Global Head of Commodities Research Jeff Currie said that the agreement is for a freeze and not a production cut, so oil prices could remain depressed, pointing to a similar situation in 1998 during the Asian financial crisis that resulted in a huge surplus and a relative demand loss, Bloomberg reports.
United States Oil Fund
Max Chen contributed to this article.