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A global consensus is building for an oil production “freeze”

An employee of the Canadian Pacific Rubiales Petroleum Company walks close to oil storage tanks in Campo Rubiales field in Meta, eastern Colombia.
Reuters/Jose Miguel Gomez
Blue skies ahead for hopes of a global production freeze.
Published This article is more than 2 years old.

OPEC and other players in the global oil market are growing increasingly desperate to revive crude prices—not desperate enough to cut production, mind you, but willing at least to freeze supply where it is.

Saudi Arabia, Russia, Qatar, and Venezuela are all on board. Reportedly joining them are Mexico, Colombia, and Ecuador, which will be meeting in Quito, Ecuador, to discuss, along with representatives of Venezuela, how to put a freeze into effect.

The boldfaced names among the Latin American cohort are Venezuela, which has been begging its fellow OPEC members to cut production for weeks, and Mexico, whose state-controlled oil company Pemex is running into financial difficulties and will likely have to cut production anyway.

Some action, even symbolic, might still better in the eyes of investors than nothing.

But even this gesture has obstacles—namely Iran. The country is fresh off nuclear program-related sanctions from the US, and it’s trying very hard to boost its crude exports. Last week, Bijan Zanganeh, Iran’s oil minister called a production freeze ”ridiculous,” and even at a relatively weak 3.1 million barrels per day, the country still produces more oil than any of Latin America’s major exporters.

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