Osprey Associates: Oil has reversed gains accrued over recent trading sessions after high-level talks between oil ministers of several producers failed to orchestrate a cut in output, opting instead for a freeze in production at January levels.

Talks between Russia, Saudi Arabia, Venezuela and Qatar settled on the freeze but concerns are mounting that Iran, whose output has only recently returned to the global market, will not be a signatory to the deal. Iran, the fourth largest producer in OPEC (Organization of Petroleum Exporting Countries) has only recently returned to the global energy market after years of sanctions imposed on it by the international community over its nuclear power ambitions were lifted.

It has made no secret of its desire to recoup the market share it enjoyed before economic sanctions made it illegal for its output to be sold on the open market. “Iran wants to re-establish its positon in the oil market irrespective of the price its product actually fetches,” said James Conroy, chief economist at Osprey Associates.

“The production freeze depends on many factors least of all the willingness among the signatories to ignore their positioning on issues outside the energy market,” he continued alluding to the proxy wars being fought in Syria and Yemen by forces backed by Saudi Arabia and Russia.

“It’s perverse in many ways but the deal does demonstrate that opposing sides can be brought together on other matters, if only by expediency,” said Conroy.

Osprey Associates says that one or more of the signatories is likely to cheat on quotas and that, consequently, the deal’s lifespan will be short.

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