Over the weekend, the 18 members of the Organization of the Petroleum Exporting Countries, or OPEC, gathered in the Qatari capital Doha for talks aimed at reaching an accord on tightening supply to boost prices.
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Goldman Sachs said the Doha no-deal could result in a “bearish catalyst” for US crude prices, which it forecast would average $35 a barrel in the current quarter.
Oil prices tumbled after Doha meeting, with both USA oil and Brent crude dropping about 4 percent in early trading Monday.
Saudi Arabia continues to insist that Iran, which only recently reappeared in the energy market after years of global sanctions, should be part of any production cuts.
“Oman has a good relationship, by the way, with everyone, not just Saudis and Iran, and we are prepared to see what is good for all of us”, he said.
Iran, which is reviving oil exports after worldwide sanctions were lifted in January, ruled out any limits on its output before reaching pre-sanctions levels, dismissing the notion of joining the freeze as “ridiculous”.
After rallying from as low as $26.05/bbl in February to as high as $43.69/bbl earlier this month, WTI crude prices are down only modestly in Monday’s session.
Colin Smith, oil analyst at investment bank Panmure Gordon, said: “This outcome demonstrates the deep schism within Opec and removes hope of potential producer action to curb output”.
But it’s not clear when major producers will meet again to discuss a potential freeze, suggesting there will be further delays in their efforts to reverse a historic price collapse that has lasted almost two years. Will Iraq be able to sustain output through the north…?
Saudi Arabia’s increasingly bitter dispute with Iran is now being played out in the oil market.
The talks by major oil producers to cap production failed after Saudi Arabia, Qatar and the United Arab Emirates said they wouldn’t agree to a deal unless Iran was included.
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Note in the graphic above that I forecasted lower oil prices in 2014 in the annual predictions I made in January. Any misunderstanding between the participating countries concerning the mechanism of freezing oil production can be removed, Dr Al Sada said. In 2015, production rose 1.5 percent, according to CDU-TEK data.
