LONDON: Oil prices traded flat on Tuesday after top producers Russia and Saudi Arabia dashed expectations of an outright supply cut by agreeing only to freeze output at January levels if other big exporters joined them.
Qatari energy minister Mohammad bin Saleh al-Sada told a news conference that the step would help to stabilise the oil market, which has experienced price declines not seen since the early 2000s because of a supply glut.
Analysts said that the decision was a move towards bringing supply and demand into balance, but global inventories remain near record levels and are likely to dampen any price rallies.
"I don't think it will have a huge impact on supply/demand balances, simply because we were oversupplied in January anyway. We're just even more oversupplied now," Energy Aspects analyst Dominic Haywood said.
"So in that regard it's not huge, but it's a step in the right direction."
The oil ministers of Russia and Venezuela attended the meeting in the Qatari capital, together with Saudi oil minister Ali al-Naimi, who said the group's next steps would be assessed over the coming months.
Brent crude futures were almost unchanged on the day at $33.37 a barrel by 1440 GMT, having fallen from an earlier peak of $35.55, the highest price since Feb. 4.
U.S. crude futures were up 4 cents at $29.48, down from the day's high of $31.53.
Oil prices have fallen by more than 70 percent in the past 20 months, driven lower by near-record production both from OPEC members and other producers, such as Russia.
The drop has eroded the finances of even the more affluent oil-producing nations, forcing governments to cut spending, increase deficit forecasts, borrow more and push through politically unpopular reforms.
Sources familiar with Iranian thinking on supply said Tehran would be willing to consider a freeze once its output had reached pre-sanctions levels.
"The output freeze is disappointing because it's not an outright cut, and with Iran not a part of the meeting it's still a bit far-fetched to think this is a precursor to a future cut. Iran's absence from the meeting means overall OPEC output should still rise," CMC Markets analyst Jasper Lawler said in a note.
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