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Oil prices fall as conditional ‘freeze’ deal disappoints

Russia and OPEC members Saudi Arabia, Venezuela and Qatar said they had reached a preliminary deal to freeze output at January’s level

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Oil prices fell Tuesday after a conditional agreement between Saudi Arabia and Russia and two other producers to limit output offered scant hope for an easing of the global oversupply.

U.S. benchmark West Texas Intermediate for March delivery fell 40 cents (1.6 percent) to $29.04 a barrel on the New York Mercantile Exchange.

Brent North Sea crude for April delivery slumped $1.21 (3.6 percent) to $32.18 a barrel in London.

In a bid to stabilize an oversupplied market, Russia and OPEC members Saudi Arabia, Venezuela and Qatar said they had reached a preliminary deal to freeze output at January’s level, but only if other major producers followed suit.

Saudi oil minister Ali al-Naimi said Tuesday’s decision was “the beginning of a process which we will assess in the next few months and decide whether we need other steps to stabilize... the market.”

Michael Lynch of consultancy Strategic Energy and Economic Research said the announcement was a mixed bag.

“People want to see some kind of production cut from OPEC and other producing countries and they didn’t get it,” Lynch told AFP. “But you’ve gone from refusal to discuss or consider it to the Saudis and the Russians actually talking.”

City Index analyst Fawad Razaqzada said the announcement under delivered compared with expectations.

“The news has actually disappointed the market slightly because some people had hoped to see a cut rather than a production freeze,” Razaqzada said.