“People react negatively, psychologically, to this”, Jan Kalicki, public policy fellow and energy lead at the Woodrow Wilson Center, said last week ahead of the meeting, predicting “prices will go down” if countries failed to produce an agreement.
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Officially Iran’s total crude output is due to reach four million barrels per day by March next year. In London, crude oil prices fell 2%, or 86 cents per barrel, to $42.24 per barrel.
The meeting had 18 countries in attendance namely: Qatar, Kuwait, Oman, Saudi Arabia, Nigeria, Russia, Mexico, Ecuador, Trinidad and Tobago, Iraq, Mexico, Azerbaijan, Kazakhstan, Angola, Bahrain, Indonesia, Venezuela and United Arab Emirates. “It seems this new crew of princes are more aggressive, more abrupt, less interested in oil politics and more interested in sending a message to their enemies”.
The development will revive oil industry fears that major producers are embarking again on a battle for market share, especially after Riyadh threatened to raise output steeply if no freeze deal were reached.
The next OPEC meeting is scheduled for June 2.
Discussions broke down after Saudi Arabia and other Gulf countries rejected any deal unless all OPEC members joined including Iran, which wasn’t present at the meeting, Russian Energy Minister Alexander Novak said.
In response, RAC fuel spokesman Simon Williams said: “Motorists should be relieved that the Doha oil producer talks broke down without a production freeze agreement as this means fuel prices at the pumps should not rise too much further”.
Newly freed from worldwide sanctions, Iran is trying to regain a foothold in the global market and has no interest in “sanctioning itself”, Iranian oil minister Bijan Namdar Zanganeh told reporters on Saturday. “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”. This was part of Saudi Arabia’s plan.
Citigroup said that the USA will remain the biggest player for balancing the market.
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“We respect their (Iran’s) position … certainly a freeze will be more effective if major producers including Iran are included”, said al-Sada. “In the near-term, lower oil prices are bound to weigh on investor confidence and could exacerbate financial volatility”, said Frederic Neumann, co-head of Asian economics research at HSBC.
