So says the RAC as OPEC talks broke down again yesterday (18 April), putting paid to plans to tackle the market’s oversupply by freezing oil production levels.
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The internal contradictions in the OPEC (Organization of the Petroleum Exporting Countries) hampered to achieve success during the talks of oil-producing countries in Doha, said Natig Aliyev, Azerbaijani energy minister.
Norbert Ruecker, the head of commodity research at Swiss bank Julius Baer, said: “Although this was no official meeting of Opec, the organisation has seen a blow to its perceived powerfulness over the weekend”. But it fell apart on Sunday in Doha after Saudi Arabia insisted Iran took part, raising fears in Opec of a renewed price drop.
He emphasized that the aforementioned countries have boosted oil supply while the market has not issued a demand for increased production; “in other terms, they are mainly seeking to divert public opinion on the lifting of sanctions against the Islamic Republic of Iran”.
“The higher oil prices will definitely be positive for Malaysia’s fiscal position”.
“The meeting opens up opportunities for discussions among major producing countries and maybe in June, Iran will agree”, he said.
Oil prices are expanding their recent rally despite the failure of the Doha meeting.
Saudi Arabia, the world’s largest oil exporter, appeared willing to only freeze output if all OPEC members agreed, including Iran.
Iran is against any freeze because its production in January remained well below historic levels as sanctions over its nuclear program had only just been lifted. The breakdown of talks will nearly certainly lead to another rout in oil prices over the next few weeks – but the pain could be short-lived.
The deal, in the making since February, had helped oil prices to rise from a 12-year low reached in January.
Benchmark U.S. crude futures were down by 3.62 percent at $38.90 a barrel after falling as low as $37.61 earlier in the day. The nation pumped 3.2 million a day last month, according to data compiled by Bloomberg.
Tehran will not participate in an output cap agreement to stabilize oil prices, said Iran’s oil minister.
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Producers should try to get consensus on a freeze by the time Opec meets in June, Rumhy said.
