MOSCOW — As prices have dropped ever lower, smaller oil- producing nations on precarious financial ground have regularly pushed their bigger brethren to stop pumping at record levels and help calm the markets. Now, even the giants are joining the chorus, with Saudi Arabia and Russia on Tuesday calling for a coordinated effort to freeze production.
The plan, which includew Venezuela and Qatar, is a tentative sign major oil producers are ready to cooperate. And it indicates how deeply prices have fallen. Russia and Saudi Arabia have previously resisted tempering production.
But whether the plan actually goes anywhere — or is just chatter meant to bolster prices — is an open debate. The four countries said they would proceed only if others commit.
It is not an easy sell.
Iraq has a longstanding policy of seeking to raise production regardless of the price-stabilizing policies of the Organization of Petroleum Exporting Countries, to which it belongs. And Iran has staked out a policy of increasing oil exports now that sanctions have been lifted as part of its nuclear deal. “It throws the ball in Iran’s court, because they have said their output is going to increase,’’ said Bhushan Bahree, an oil analyst at IHS, a research firm.
The markets showed little confidence in the plan. Brent Crude oil prices initially surged above $35.50 a barrel, but details of the plan prompted a drop below $33.
“The market does not need a freeze. It needs a reduction,’’ said Michael Lynch, president of Strategic Energy and Economic Research in Massachusetts. “They are not offering anything like that.’’ He added that the plan was in the early stages. “People are talking and admitting to concerns about price levels,’’ he said.
Even a speculative deal represents a step forward, albeit a somewhat symbolic one.
For months, market chatter focused on the possibility of production cuts. But countries are generally less willing to cut, because doing so means giving up market share for their oil that might be hard to win back. By holding steady, producers can help ease pressure on the markets without making difficult decisions. Saudi Arabia, which has kept production at near record levels, cannot pump much more. Venezuela and Qatar have already been maintaining.
Russia in January, the month chosen as the high-water mark for output, produced oil at a post-Soviet record of 10.88 million barrels a day. Maintaining this gusher through the year, far from limiting supply on the global market, would allow Russian companies to pump more this year than last.
“It doesn’t cost them much,’’ said Ildar Davletshin, oil and gas analyst at Renaissance Capital, a Russian investment bank. For Russia, “this deal only means maintaining the status quo.’’
The plan is a change of tack for Saudi Arabia. As oil prices have slumped, the country, the de facto leader of OPEC, has declined to cut production.
It is also symbolic that Saudi Arabia and Russia are presenting a united front. They are geopolitical rivals, backing opposite sides in the Syrian civil war.
And Russia, which is not a member of OPEC, has historically resisted any binding coordination with the cartel to bolster global oil prices.
The rare cooperation reflects the extreme weakness in oil, with prices falling about 70 percent in the last 18 months.
