The failure of the world’s main oil exporters to reach an agreement to freeze production on Sunday in Doha resulted in a dive in crude oil prices…
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However, Iran effectively said “screw you” to Saudi Arabia – one of the world’s largest oil producers.
“That makes the Saudis a less reliable energy partner and creates more havoc and uncertainty in the global oil markets”, he wrote. Diplomatic strategy seems to have trumped oil market considerations.
Iran didn’t even show up for the talks after saying initially that its OPEC representative would attend.
West Texas Intermediate crude fell 58 cents to settle at $39.78 a barrel on the New York Mercantile Exchange, after plunging earlier almost 7 percent below $38.
The deal, which had to be signed in Doha to stabilize the oil price, envisaged to keep the output at the level of January 2016 until October.
Russia’s Energy Minster Aleksandr Novak said late on April 17 that the Kremlin was not optimistic about an agreement to freeze production because of “heated debates” at the conference and “Iran’s position”.
Kuwait’s OPEC governor said earlier this month that producers will likely freeze output at January levels, even if Iran won’t follow.
But Iran is continuing to increase output following the lifting of sanctions against it. Tehran has said it seeks to regain lost market share. “The discussions will resume next June during the extraordinary meeting of OPEC”, said Qatari Minister of Energy and Industry Mohammed Bin Saleh Al-Sada, according to RIA Novosti. Recently, the price of oil has increased just on the expectations of the agreement on oil production freeze, but after the negotiations in Doha failed, analysts find it possible it may go down.
The expert also noted that Doha’s meeting confirmed the belief that OPEC is finished as price setting mechanism.
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Colin Smith, oil analyst at investment bank Panmure Gordon, said: “This outcome demonstrates the deep schism within Opec and removes hope of potential producer action to curb output. To put things in perspective four years ago when the average price of petrol was 142p and diesel was 148p, a barrel of oil cost $120 so fortunately we are long way from seeing those bad times again”.
