Oil prices plummeted amid worries that the push for an output freeze by Russia and top OPEC producers could founder on opposition from Iran.
The price of premium crude fell 3 percent on March 14 and dropped further to under $40 a barrel in early trading March 15 after Russian Energy Minister Aleksandr Novak said that Tehran would not immediately join in a production freeze this year, but might join after raising its output back to levels that prevailed before economic sanctions.
Novak also pushed off until April a meeting with top OPEC producers that had been expected on March 20. But he insisted that major producers outside Iran should be able to stay on track to agree to an output freeze at that time.
"We share [the view] that Iran is in a special situation. The sanctions that had been introduced had materially hit [Iran's] output," Novak said after meeting Iranian Oil Minister Bijan Zanganeh in Tehran on March 14.
Iran's output fell to under 3 million barrels a day under the sanctions, which were officially lifted in January, from levels around 4 million before the sanctions.
"On the whole, Iran supports the need for coordination between oil exporters, including a possible freeze. But Iran's position is that they have to first restore their production volumes... After that, they are ready to join the freeze," Novak said.
In a sign that other major producers may be willing to go along with a freeze excluding Iran, production figures published by OPEC on March 14 showed that Saudi Arabia's production has leveled out at the 10.22 million barrel level set as its potential freeze level in January.
Novak said that countries that account for near three-quarters of global oil production already have signed onto the output freeze plan, so they should go ahead with it and let Iran join later.
"I believe that the agreement can work," he said. "I think that Iran could join us over time."
Moreover, if other producers do not follow through on their promised freeze, Novak warned that oil markets could become "volatile" again like they were early this year when prices plunged to the $30 range.
Traders said the fall in Brent prices to under $40 in Asian trading March 15 showed that markets continue to be sensitive to talk of a freeze, and are skeptical that one will take hold without Iran.