“Iraq’s view is to have a freeze in output for a short period to help protect the interests of both producers and consumers equally by easing the surplus from the market and improving prices”.
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The outcome of the Doha meeting highlighted once again that energy markets – and particularly oil – are affected by the rivalry between Saudi Arabia and Iran for leadership and influence in the Middle East.
A decision at this meeting looks to have been scuppered by Saudi Arabia and Iran having different views of how much oil Iran can add to oversupplied markets.
The Minister noted that once every member country of OPEC is brought on board, it would become easier to convince other major oil producers to sign-up to the freeze policy which is created to remedy lingering decline in the price of crude oil in the global market. Parties gathered at early 2016 oil meetings agreed to freeze output at January levels provided other producers followed suit.
Russian oil minister Alexander Novak called the Saudi demand “unreasonable” and said he was disappointed as he had come to Doha under the impression that all sides would sign the deal instead of debating it.
Euronews Tehran correspondent Javad Montazeri said: “Iran has announced any expectations that the country would cut its production is illogical under the circumstances and it would not accept that”.
Saudi Arabia, OPEC’s de facto leader, said it would not join a production cap agreement unless Iran participated in the freeze.
The price of oil fell as much as seven per cent after the talks ended but then bounced back.
OPEC members failed on Sunday to reach an output deal that would have frozen production at January levels. “We believe oil prices will rise to a sustainable level closer to US$60, the new normal, not US$100 and not US$40 either”. Together, they supply more than half of the world’s oil.
After rallying from as low as $26.05/bbl in February to as high as $43.69/bbl earlier this month, WTI crude prices are down only modestly in Monday’s session.
This, he said, is a new sanction on Iran. So, Saudi Arabia states to increase the daily oil output to 12.5 mln barrels, Iran to 4mln barrels.
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In the longer-run, he said oil prices will be supported “as slowly increasing demand catches up with slowly decreasing supply and stock-building comes to an end”. Oil had been on an uptick on optimism that a deal would be reached at the meeting.
