Oil prices rise as Iran backs output cap; UAE expects positive impact

Oil prices rose on Thursday after Iran announced its support for an international agreement to freeze oil production.

Brent rose 7.2 per cent to $34.50 per barrel on the London-based ICE Futures Europe exchange on Thursday morning, with the WTI also seeing gains.

Saudi Arabia, Russia, Qatar and Venezuela agreed on Tuesday to cap output at January levels if other oil producers join them.

Officials from Iran, Iraq and Venezuela met in the Iranian capital on Wednesday to discuss the agreement.

Following the meet, Iranian oil minister Bijan Zanganeh said that he supports the decision, but did not specify whether Iran would implement the agreement.

“The decision that was taken for the OPEC and non-OPEC members to keep their production ceiling to stabilise the market and prices for the benefit of producers and consumers, is supported by us,” Zanganeh told Shana News Agency.

However the country’s OPEC envoy Mehdi Asali told Iranian newspaper Shargh on Wednesday that it was unlikely that Iran will cap production.

“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?”

Meanwhile the United Arab Emirates energy minister Suhail al-Mazrouei has said that the agreement will have a positive impact on oil markets.

“We believe that sustaining oil production levels will positively help balancing the future demand with the current oversupply in the market,” he said on Twitter.