The enmity between Saudi Arabia and Iran has spiked in recent months.
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The fact that Saudi Arabia seems to have blocked the deal is an indicator of how much of its oil policy is being driven by the ongoing geopolitical conflict with Iran, ” Jason Bordoff, director of the Center on Global Energy Policy at Columbia University, told Bloomberg.
Saleh al-Sada, who spoke with respect to this decision, said: “We respect Iran’s position, and will continue negotiations”.
Prices dropped briefly to under $30 a barrel, a 12-year low, in January, but have climbed to the mid-$40s this week, boosted in part by market speculation about the Qatar meeting.
Market observers had hoped that the meeting’s participants could strike a “gentleman’s agreement” that would at least save face and serve as a bridge to June’s OPEC meeting.
The summit in the Qatari capital faltered after Saudi Arabia and other Gulf nations wouldn’t agree to a deal unless all Opec members joined including Iran, which didn’t attend the meeting.
Iran had initially said its OPEC representative would participate in the talks, but yesterday Iranian Minister of Petroleum Bijan Zanganeh said Tehran would not send a delegation at all.
Saudi Arabian officials have always said that their country would be willing to abide by the resolution to cut production if Iran was ready to do the same.
“The freeze could be more effective definitely if major producers, be it from Opec members like Iran and others, as well as non-Opec members, are included in the freeze”, he said.
“The general conclusion was that we need more time to consult among ourselves in OPEC and non-OPEC producers”, Sada told a press conference after the end of the talks.
Since April 5, however, Iran – freed from sanctions because of its nuclear deal with the West – has already increased its output by 600,000 barrels to a daily production level of some 3.5 million barrels a day.
Larger OPEC producers such as Saudi Arabia, however, insist on keeping production levels high, because they do not want to lose customers to non-OPEC producers like the United States.
But analysts have cautioned that freezing production near current levels is unlikely to reduce the global supply glut.
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Ministers of various countries had expressed optimism over clinching a deal before the meeting. Although a freeze would be a significant step for oil producers, it would have only a limited impact on global supply and the market is unlikely to rebalance before 2017, the International Energy Agency said on Thursday.
