Adding to the glut, Iran said it was determined to raise output to regain market share after the lifting of Western sanctions on the Islamic Republic in January.
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Over the weekend, the Organization of Petroleum Exporting Countries (OPEC) made a decision to get the band back together for one more price-fixing scheme, 15 years after the group’s last significant effort to coordinate output.
Discussions broke down after Saudi Arabia and other Gulf countries rejected any deal unless all OPEC members joined including Iran, which wasn’t present at the meeting, Russian Energy Minister Alexander Novak said.
Tehran will not participate in an output cap agreement to stabilize oil prices, said Iran’s oil minister. Iran, which was absent from the talks, said it was unwilling to consider a production freeze until it boosted production by 1 million barrels a day to pre-sanction levels.
European stock markets pared earlier sharp losses on Monday as traders reassessed the impact of a failed attempt by major oil producers to agree on an output freeze deal.
Though oil prices are up 13.1% over the past two months, largely amid hopes that a deal would freeze oil output at this meeting.
“If there is no change in the political positions, an agreement can not be reached”, Al-Amri said.
Kit Juckes, a strategist at bank Societe Generale, said the oil market is plagued by the presence of “oil tourists”, who drive the price up and down on sentiment about things like the Doha meeting. In order for this strategy to continue to work the barrel price needs to stay below $60, as that’s the point where fracking becomes less financially viable.
Iran didn’t even show up for the talks after saying initially that its OPEC representative would attend.
Oil had rebounded in recent weeks amid speculation that a deal would be reached in Doha as USA production fell.
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It is expected that the consensus issue being canvassed by Kachikwu will be pursued vigorously at the next OPEC ministerial meeting slated for June in Vienna, Austria. The U.S. Energy Information Administration projects domestic crude production to fall an average of 8.6 million barrels a day in 2016 and 8 million barrels a day in 2017, according to MarketWatch.
