Iran has categorically rejected the Doha proposal by four of the world's largest producers to freeze output at January levels, ensuring that the gains oil made this morning will be lost at the close of trading today.
Oil prices were up at the opening of trading on Wednesday morning on the false hope that OPEC would succeed in getting Iran to agree to a cap on oil production.
Benchmark U.S. WTI light sweet crude traded 0.77 percent higher just below $30 per barrel before trading opened today. At the same time, global benchmark Brent crude rose 1 percent to $33.13 a barrel.
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At the opening of trading yesterday, Brent crude prices had passed $35 per barrel ahead of expectations for a solution at Doha, but dropped by 3 percent to $32.38 per barrel after the announcement that four producers agreed to freeze output at January levels.
Saudi Arabia, Russia, Venezuela and Qatar had agreed to cap oil output at January levels in order to stabilize the market, but the deal was contingent upon other major producers following suit.
This morning, the energy ministers of Venezuela, Iran, Iraq and OPEC president Qatar met in Tehran to convince both Iran and Iraq to agree to the freeze.
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Iranian officials have now said that they have no intention of freezing output at a time when they have plans to ramp up production by 500,000 barrels per day.
Iranian OPEC envoy Mahdi Asali said Iran would continue to pump more with the goal of achieving pre-sanctions crude output levels.
Freezing production at January levels would have little to no effect as those levels were already too high. In January, both Saudi Arabia and Russia were pumping at record levels.
By James Burgess of Oilprice.com
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