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Sunday 17 April 2016 3:52 pm

Heated Saudi, Iran tensions cast cloud over oil freeze deal in Doha

By: Lynsey Barber

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It may be more than 30 degrees in Doha, but it's all about a freeze right now.

Officials from Opec, Russia and other major oil producers are holding talks which could result in production being frozen for the next six months.

The meeting kicked off around 12.30pm GMT, following a change to the wording of the agreement, partly to reflect Saudi Arabia's position on Iran.

"I am not sure you can call it a freeze," an Opec source told Reuters.

De facto Opec leader Saudi Arabia reportedly told participants it wanted all of the cartel's members to take part in an oil freeze deal.

Read more: Opec faced with waning influence in the global oil markets

While Iran had been expected to send a representative to today's meeting, the recently sanction-free country has repeatedly refused to freeze oil output until it's returned to levels enjoyed before the US and European Union embargo.

"The general agreement is in place,” Wilson Pastor, Ecuador’s governor to Opec, said in a Bloomberg Television interview today.

"There is some disagreement on the wording and maybe this afternoon we are going to finish."

Analysts, oil traders and market commentators have said a freeze deal won't address the market imbalance. But it will be an important sign that participants can co-operate, and maybe one day even cut output, to address low prices.

"Pay attention to Doha not because of the meeting itself, but because of the likely bullish statements from producing countries," Barclays said in a note.

Read more: Here's what the experts think ahead of Doha oil talks

"A successful Doha meeting should help polish Opec’s tarnished image after a failed December meeting."

Oil prices have rebounded from their lows earlier this year since the freeze deal was initially proposed in February.

"For Saudi Arabia, the scope of the agreement is very specific – to artificially create a more economically sensible $40 per barrel price floor and lay the foundations for a move to $50 per barrel in the second half of 2016," said Andreas Economou of the UCL Energy Institute.

A further meeting following a potential deal in Doha is scheduled to take place in Russia in October.

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