REUTERS
Top oil producers Russia and Saudi Arabia agreed on Tuesday, February 16, to freeze output levels in what could be the first joint OPEC and non-OPEC deal in 15 years aimed at tackling a growing glut and helping prices recover, Reuters reported.
It has surveyed reactions from banks and market analysts on the impact of the deal on the crude market.
Goldman Sachs: Deal to have little impact on oil markets
"The details of this agreement suggest that such a freeze will have little impact on the oil market as proposed, while there remains high uncertainty that it even materializes," Reuters reported referring to the bank's statement.
Deutsche Bank: Negotiations yield little
"Not only has talk moved from cuts to a freeze, but such a freeze comes from producers who weren't expected to raise production materially in any case (Russia, Venezuela, Saudi Arabia and Qatar)," according to the bank's statement.
"A credible agreement to hold production flat by all OPEC members at the January level would be quite meaningful in tightening forward expectations of market balance as it would remove the threat of incremental Iranian volumes into 2017," Reuters reported.
Barclays: Market still between a rock and a hard place
"Even if the agreement is successful, the upside for oil prices that would result looks limited, and OPEC still faces the dilemma of aiming for either higher prices or market share, but is unable to achieve both," Reuters reported referring to the bank's statement.
"Any positive oil price impact from this move, beyond a knee-jerk covering of short positions, is highly contingent on other key oil producers joining in, and although the announced plan is the first concrete attempt at limiting output that Saudi Arabia has publicly supported, a lot of hard negotiations lie ahead if it is to prove successful," according to the statement.
Commerzbank: Agreement is on a knife edge
"It remains to be seen whether this will result in the oversupply being reduced, as this would require Iran and Iraq to cooperate on the agreement," the bank said in its statement.
"Now that sanctions have been lifted, Iran is hardly likely to be willing to leave its oil production at the low sanction-era level of 2.9 million barrels per day given that Teheran's uppermost priority is to recoup the market share it has lost."
Citi Futures: A freeze is not a cut
"This is far more of a political statement than a support for oil prices in our view, an offer that Iran has little choice but to refuse," Citi Futures stated, according to Reuters.
"The freeze is a gesture, not a reason to reduce our forecast for OPEC total production to rise to 33 million bpd as Iran continues to ramp up production and others either maintain output as planned or go ahead with planned increases," as reported.