Prices tumbled more than five per cent in early Asian trade after top producer Saudi Arabia said a deal must include all members of the Opec producer cartel – including rival Iran, which boycotted the talks.
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Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada, also current president of Opec, said “Opec needed more time for consultations to reach an output freeze deal”.
The meeting is the first meaningful attempt in 15 years at coordinating oil output between the Organisation of Petroleum Exporting Countries (OPEC) and those outside the group.
The slump in oil prices is continuing to pressure shale oil producers in the U.S. where production, exploration and rig counts have fallen back dramatically over the last 18 months.
Markets reacted immediately Monday to the failed agreement.
Russian Energy Minister Russian Energy Minister Alexander Novak, center, arrives at an oil-producers’ meeting in Doha, Qatar, on Sunday, April 17, 2016.
On Iran’s role in the deadlock, Mr Al Sada said: “We of course respect their position and … we still don’t know how the future will unroll but it was a sovereign decision by Iran”.
Iran was asked not to attend the big meeting Sunday in Doha, Qatar, if it was not willing to sign up to a production freeze, an Iranian source told CNNMoney. Iran is gearing up production as sanctions are removed and Saudi Arabia is known to have insisted any agreement had to include Iran. This means that major producers can continue to boost production, possibly further weighing crude prices.
Lower potential USA supply is one of the reasons why oil prices have rallied more than 60 percent since their early year lows – alongside expectations of some sort of deal emerging at the meeting in Doha.
No agreement. Officials from 18 oil-exporting nations – comprised of both OPEC and non-OPEC members, met in Qatar in the hope of inking a deal that would put a ceiling on oil production at January levels. And a large amount of crude already building up provides a major damper on prices, as does a generally weakened global economy, according to the U.S. Energy Information Administration.
The minister added that OPEC members would meet in Vienna in June to consider a possible freeze.
OPEC said on Wednesday that Iranian oil production in March was 3.3 million bpd, up from 2.9 million in January, but still short of its pre-embargo level of around 4.0 million.
Major exporters from Nigeria to Venezuela, and even Saudi Arabia, have suffered billions of dollars in lost revenue as prices have collapsed.
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“Given the fairly clear-cut incentive structure for Saudi Arabia it was surprising that the deal looked like such an inevitable affair”.
