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Don’t expect an oil freeze

Top oil producers are meeting to discuss freezing their output at current levels. Don’t hold your breath.

"'Freeze' is a word rarelyheard in balmy Doha," saysThe Wall Street Journal'sSpencer Jakab. But onSaturday 17 April, top oilproducers are meetingto discuss freezing theiroutput at current levels.Still, don't hold yourbreath. Saudi Arabia hasalready said that it willonly keep output stableif Iran does too, and thisis unlikely. Having beenfrozen out of the market foryears as a result of Westernsanctions, it is keen toregain market share.

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A freeze would make scantdifference to the globaloversupply of two millionbarrels per day anyway.That is already being veryslowly worked off as UScrude inventories haveeased from their highestlevel since the 1930s andshale production fallsfollowing a slide in drillingactivity. US output hasfallen for ten of the past11 weeks, says America'sEnergy InformationAdministration.

Meanwhile, Iran's return tothe market has been slowerthan expected. It could takeuntil next year for Iranianexports to reach their fullpotential. So freeze or nofreeze, oil appears to havebottomed and looks set torise very slowly over thenext two years.

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