Qatar says tentative agreement reached on freezing oil output

The energy ministers of Russia, Saudi Arabia and Venezuela reached an agreement on Tuesday to keep oil output at current levels, contingent on obtaining the agreement of other major producers, Qatar's energy minister said, according to a report citing Reuters.

"The meeting which was highly anticipated that a production cut will take place ended up with disappointment. The only silver lining is that there will be no increase in the output as the big players- Saudi Arabia and Qatar understands that at current level, the US production cannot sustain. So basically, they are willing to keep the pressure on oil producers and have limited their losses. Not many producers can afford the price at current price level and this present prodigious challenge for others", Naeem Aslam at Ava Trade said by way of an immediate reaction.

Production would reportedly be maintained at the same levels as in January.

As of 09:18GMT front month West Texas crude futures were changing hands at $30.13 per barrel in electronic trading on NYMEX, versus the $31.53 they were to be seen at before the deal was announced.

The deal was "highly contingent" on other producers joining in, Barclays said in a research note sent to clients.

Furthermore, "any significant price recovery risks increasing the incentives for US shale output to start growing again," analysts Miswin Mahesh and Kevin Norrish said.

Hence, even if the deal was successful the upside for prices "looks limited", they said.

Nevertheless, while the plan looked difficult to implement its significance lay in that it was the first time since November 2014 that OPEC had acted to insert some uncertainty about Saudi strategy into the minds of oil market participants, the analysts added.