It was tempting to get excited about higher oil prices and believe that a solid recovery was just around the corner.
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“That makes the Saudis a less reliable energy partner and creates more havoc and uncertainty in the global oil markets”, he wrote.
Futures fell as much as 6.8 percent to $37.61 a barrel in NY – the biggest intraday drop since February 1.
“The fact that the group could not come up with a statement and a display of unity… is quite unprecedented, as is the mixed messaging from Saudi Arabia itself”.
One likely impact of the Doha talks’ failure is that traders may scale back expectations that a deal will emerge in the future, starting off with the next scheduled OPEC meeting in June. The country made it clear that it won’t accept the output freeze plan unless Iran joins the deal.
There is still no agreement on an oil meeting in May, Russian Energy Minister Alexander Novak said after Al-Nima’s comment.
Saudi Arabia is pressuring Iran to stop increasing oil production as the two countries spar over market share.
Morgan Stanley said the failure sparked “a growing risk of higher OPEC supply”, especially as Saudi Arabia threatened it could hike output following the failed deal. Iran’s government has maintained it will not slow its production until it returns to pre-sanction levels.
Representatives from Iran reportedly did not attend the meeting, Reuters said. Divergencies among countries, which are able to influence the oil price, make impossible any agreement to provide the reduction in oil output. Despite the absence of stable oil sales, results of the meeting in Doha will put pressure on oil quotes in the near future.
Kachikwu, in the statement stressed that OPEC must work at achieving a workable consensus on the issue by bringing everybody on the negotiating table.
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Iran has ruled out participation in any agreement and they are looking to expand production to over 4 million barrels a day in the coming days. “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.
