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Oil Prices Rise Ahead of OPEC Talks With Iran

by Huileng Tan, CNBC / / Source: CNBC.com
The Iranian flag flies in front of a United Nations building in 2014. Ronald Zak / AP file

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Oil prices were higher on Wednesday morning as OPEC oil ministers traveled to Iran to talk about a possible production freeze between global oil producers.

Skepticism has mounted over the possible freeze mooted Tuesday and Iran has already voiced resistance to joining the deal before talks in Tehran have even begun.

The price gyrated Tuesday on supply-cut hopes ahead of a meeting of top exporters in Doha, Qatar. Those hopes were dashed when Russia and Saudi Arabia agreed to freeze output at January's levels instead. Qatar and Venezuela have already agreed to participate but the deal was also contingent on other producers joining in.

It could become the first joint OPEC and non-OPEC deal in 15 years, as oil producers seek to boost persistently low oil prices. The energy commodity has declined 70 percent since the summer of 2014.

Iran, which was not present on Tuesday's meeting, planned to increase output by at least 500,000 barrels a day this year following the lifting of Western sanctions last month. On Wednesday, Iran's OPEC envoy Mehdi Asali told Shargh newspaper, "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?"

Market watchers received news of the deal with skepticism because not only do Iran and Iraq need to agree to the freeze, but even if the deal went ahead, it would be unlikely to solve the problem of a supply glut.

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