During the weekend meeting, Saudi Arabia, the most important member of the OPEC, refused to freeze its output unless regional rival Iran did the same.
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Addressing newsmen after the protracted meeting of OPEC and non-OPEC oil producers held under the aegis of Oil-Producing Countries Ministerial Meeting in Doha, Qatar, Dr. Kachikwu stressed that OPEC must work at achieving a workable consensus on the issue by bringing everybody on the negotiating table.
Tensions between Iran and Saudi Arabia were blamed for the meeting not reaching an agreement, which in turn rekindled the industry fears that major producers that are government controlled would increase their market share battle by offering discounts that were even steeper. The meeting ended without a deal after Iran said it would increase its output following the lifting of economic sanctions.
Midmorning, however, oil prices and global stock markets started to trim losses as investors started to consider “the viability of a serious agreement going into Doha”, according to Richard Perry, analyst at Hantec Markets.
By mid-morning Monday in Hong Kong, U.S. crude was trading down 4.9 percent at $38.38 per barrel.
Those who attended the meeting Sunday included the oil ministers of most OPEC member countries, along with Russian Federation and a handful of other outsiders.
Saudi deputy crown prince Mohamed bin Salman had insisted before the talks that the world’s top producer would not accept a freeze in production without Iran’s participation.
This week WTI crude oil hit its high Tuesday at $42.17 per barrel and opened Friday at $40.62 per barrel.
Beyond that debate, Badri said the existing oil glut weighing down crude prices could balance out with demand by 2017, the Journal noted. The breakdown of talks will nearly certainly lead to another rout in oil prices over the next few weeks – but the pain could be short-lived. Some might argue that low prices are already creating the necessary market rebalance.
“[Iran] last said they were doing 3.5 million barrels a day, can they do more?” he said.
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“It’s been my belief for some time that Iran wouldn’t agree to any limits on their production until they’re back up to four million barrels a day…In the meantime, I don’t see Saudi Arabia cutting their production while Iran keeps building theirs”, Ross said.
