Saudi Arabia, Russia, Qatar, Venezuela Agree to Freeze Oil Output

Prices fall, however, as investors look for more action to reduce global petroleum glut.

Saudi Arabia and Russia, the world’s two largest crude-oil exporters, said Tuesday they would halt production increases as long as other major producers followed suit, but prices fell anyway as investors looked for more concrete action to reduce the global glut of petroleum.

The agreement struck in Doha was the first coordinated move to boost prices in years with Organization of the Petroleum Exporting Countries members like Saudi Arabia, Qatar and Venezuela joining nonmembers like Russia in the production “freeze.”

But it came with a significant caveat: Iran, Iraq and other big producers would also have to halt production increases. That could ultimately prove too much to ask and demonstrate the limits of what OPEC can do to stop the oil market’s bleeding, OPEC officials and analysts said.

Iraq’s production has soared to a record 4.35 million barrels a day—second most in OPEC—as it furiously pumps to generate revenue to fight a war against Islamic State. An Iranian official said the country—recently unshackled from western prohibitions on its oil—wouldn’t halt plans to double exports to return to presanctions levels.

Those new barrels have moved into the market as Russian output hit a new post-Soviet record in January, U.S. crude output stayed above 9 million barrels a day and Saudi production hummed along at historically high levels.

The result: Even a global production freeze at January’s levels would leave the world with about 300 million barrels of oil produced above demand. That doesn’t include oil stored in tanks, which stands at more than 3 billion barrels just in the industrialized world, according to the International Energy Agency.

Prices fell Tuesday, with Brent crude dropping about 3% in London to less than $33 a barrel and the U.S. benchmark dropping 1% to about $29 a barrel. Overall, oil prices have fallen more than 70% since June 2014, benefiting consumers in oil-importing countries but putting extreme pressure on OPEC’s oil-revenue dependent governments.

“They’re going to have to take it a step further,” said Harold Hamm, chief executive of Continental Resources Inc., one of the biggest oil pumpers in North Dakota. He said the price of crude has dropped to a low enough level that Saudi and its peers will eventually strike a deal.

“It’s not if, it’s when,” he said.

More From The Wall Street Journal (subscription required):