What producers had hoped would be the first deal in 15 years ran into difficulty after Saudi Arabia – the largest exporter of oil – demanded that #Iran join an agreement to freeze output.
Advertisement
The analyst added that the main objective of the meeting was to attract Iran to the production freeze and thereby to prevent Iranian oil from entering the markets of the OPEC oil producer countries.
Morgan Stanley analysts believe that Saudi Arabia’s threat to lift production from 10.2 million barrels per day to 11 million barrels per day may also set back a rebalancing of the oil market to mid- to late 2018.
The cheap oil price has a huge impact on the economies of the more impoverished crude-producing countries, such as Angola, Nigeria and Venezuela.
“Such measures have nonetheless led to the saturation of the oil market as well as the deterioration of the instability in the market with a surplus of two million barrels per day”, the Iranian minister has been quoted as saying by the media. For us, oil is only 12 percent of our GDP.
USA crude oil fell $2.20 to $38.16 a barrel in electronic trading on the New York Mercantile Exchange, down 5.5 percent early Monday in Asia. “A deal to freeze oil production at these peak levels would therefore not have helped to immediately reduce the supply glut significantly quicker than would be the case now”, said Fawad Razaqzada, technical analyst at Forex.com in a note.
The fallout of the crunch meeting in Doha comes after figures from the Office for National Statistics showed the average price of petrol rose by 0.9% between February and March to hit 102.3p per litre.
If oil falls too much, Saudi Arabia won’t have enough cash.
The talks collapsed after a key member of the Organization of the Petroleum Exporting Countries, Saudi Arabia, demanded that Iran also agree to cap its oil production. “The freeze could be more effective definitely if major producers, be it from Opec members like Iran and others, as well as non-Opec members, are included in the freeze”.
The fact that producers couldn’t agree to a freeze, let alone a production cut, likely means oil prices will drop again as markets open Monday.
Rebecca O’Keeffe, head of investment at online broker Interactive Investor, cautioned Monday that global oil supply was being constrained by industrial action in Kuwait and Saturday’s deadly natural disaster in Ecuador.
“How can Iran be the reason for the talks’ failure, when it wasn’t even here?” said Novak after the meeting.
Advertisement
It is expected that the consensus issue been canvassed by Dr. Kachikwu will be pursued vigorously in the next OPEC Ministerial Meeting slated for June, 2016 in Vienna, Austria.
