Oil up 7 percent as Iran welcomes output freeze without word on cuts

Wed Feb 17, 2016 4:47pm EST
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By Barani Krishnan and Ron Bousso

NEW YORK/LONDON (Reuters) - Oil prices rose 7 percent on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production to deal with the market glut that had pressured crude prices to their lowest in a dozen years.

Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar in Tehran for over two hours on Wednesday, saying the proposed production "ceiling" should be the first step toward stabilizing the market.

Zanganeh, quoted by Tehran's Shana news agency, did not say explicitly say that Iran will keep its own output at January's levels, in line with the proposal that major producers including Russia and Saudi Arabia restrict output.

An Iranian official, speaking before Wednesday's meeting, said Iran would continue increasing its oil output to levels held before the 2012 trade sanctions imposed on the fourth largest producer in the Organization of the Petroleum Exporting Countries.

Tehran has been the main obstacle to the first joint OPEC and non-OPEC deal in 15 years, after its pledge to recapture market share lost to sanctions.

Even so, Zanganeh's endorsement of the production freeze plan helped spark a powerful rally.

Brent LCOc1 settled up $2.32, or 7.2 percent, at $34.50 a barrel.

U.S. crude CLc1 closed up $1.62, or 5.6 percent, at $30.66 a barrel.   Continued...

Pump jacks are seen at the Lukoil company owned Imilorskoye oil field, as the sun sets, outside the West Siberian city of Kogalym, Russia, January 25, 2016. REUTERS/Sergei Karpukhin