So says the RAC as OPEC talks broke down again yesterday (18 April), putting paid to plans to tackle the market’s oversupply by freezing oil production levels.
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Benchmark U.S. crude futures were down by 3.62 per cent at $38.90 a barrel after falling as low as $37.61 earlier in the day.
Instead, however, Saudi Arabia pushed to include Iran in any freeze agreement.
“As we’re not going to sign anything, and as we’re not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative”, the Iranian government said.
He further added that the same producers are responsible for the instability in the market but are now trying to pin the blame for the low oil prices on Iran’s post-sanctions production.
Saudi Arabia and other Gulf producers wouldn’t agree to a deal unless Iran and others joined, according to Russian Energy Minister Alexander Novak, who called Saudi Arabia’s demand “unreasonable”.
With those sanctions now lifted as a result of Iran’s nuclear accord with world powers, Tehran wants to increase its daily oil production by 1 million barrels per day.
Oil prices tumbled after Doha meeting, with both USA oil and Brent crude dropping about 4 percent in early trading Monday. But Saudi Arabia decided it would rather accept deflating prices than risk ceding market share to Iran, and the deal collapsed.
Zangeneh said Iran supports all efforts to return stability to the oil market, stressing that the Islamic Republic will spare no effort to that connection.
“It seems like oil-producing countries have a hard time coordinating on anything at the moment”, said Lars Tranberg, analyst at Danske Capital. “If we produced more oil than there is demand, we would destroy many markets”.
The setback may ultimately prove temporary: The proposed agreement had less to do with actual output than optics: The cap would have been set thousands of barrels higher than actual production, keeping it from cutting into countries’ revenues or market share.
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Reuters reports on the latest statements by Iran’s OPEC governor about a production freeze. However, no deal was reached and the next meeting was chose to be held in June. Oil investors have been cheered recently by news that United States shale production is beginning to decline.
