Energy

Who's freezing production amid crude glut?

Oil's global game of chess
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Oil's global game of chess

The fight for market share challenges production control efforts from oil producers amid the global crude glut, according to a former BP executive.

"People's objectives are very different and very difficult to reconcile," John Browne, L1 Energy executive chairman, told CNBC in a recent interview. "Production is high; people are scrambling, I think, to maintain the markets that they have and to gain markets from other people.

Browne's comments come as oil producing countries are meeting later this month in efforts to curb excess production in the oil markets. He said, however, that he will be surprised if the OPEC/non-OPEC meeting mid- April proves to be pivotal for global oil production.

Workers wash off hoses that are part of the oil rig owned by Liberty Resources, located just outside of Tioga, ND in the Bakken region of US.
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Meanwhile, Iran is reportedly ramping up its oil production with the goal of expanding market share that declined as a result of the previously imposed, but now-lifted sanctions. As a result, despite spearheading production freeze efforts, Saudi Arabia has dismissed pursuing its supply-control quest if Iran does not collaborate, according to Reuters.

However, Iranians are skillful negotiators, Browne told "Power Lunch," so these conversations will take time, he said.

"The Iranians are some of the very best negotiators that I've ever come across in my business career," he noted. Likening Iran to fellow cartel member Iraq, the expert says that Tehran will take longer to build up production than many expect. "There were plenty of aspirational discussions, and I think Iran is in the same category," he said on Monday. "Lots of aspirations; I think the reality will be lower than people expect."

U.S. Oil shed nearly 3 percent on Monday, as futures settled at $35.70 a barrel. Brent crude futures were down 94 cents at $37.73 a barrel, having risen by at least 40 percent since mid-February.

While market watchers eye both Saudi Arabia and Iran, industry expert Helima Croft told CNBC that countries from the Gulf Cooperation Council, such as Qatar and Kuwait may be freezing oil production soon.

"They're getting concerned about getting credit ratings downgrades," the global head of commodity strategies at RBC Capital Markets said in an interview with "Power Lunch." Still, "unless somebody in Saudi Arabia makes a final decision that they're willing to freeze — particularly the Prince — they're not going to do it," she added.

—Reuters contributed to this report.