Oil producers on April 17 in Doha failed to reach a deal to freeze oil output. Experts do not exclude corrective decrease in Brent oil prices to $30-35 per barrel, but a lot of them agree on the fact that the bottom bracket will be at the level of $40 per barrel.
Advertisement
Although market watchers had warned that political rivalry between the two Middle Eastern powerhouses would scupper any chance of a compromise and deal, stock and oil markets took the failure badly with Asian and European markets trading lower on Monday morning.
“How can Iran be the reason for the talks’ failure, when it wasn’t even here?” said Novak after the meeting. The contract traded in NY closed down 58 cents, or 1.4, percent, at $39.78 a barrel Monday, while the global standard, Brent, fell 19 cents to $42.91.
“I don’t think that this (OPEC, non-OPEC meeting) will solve things”, Hochstein said.
“We need to get them realising that both parties can exist in this organisation happily and look at common interest”, Kachikwu said. The country made it clear that it won’t accept the output freeze plan unless Iran joins the deal. In London, crude oil prices fell 2%, or 86 cents per barrel, to $42.24 per barrel.
Production continues to rise as countries try to make up the difference.
Alekperov said he believed oil prices had bottomed and should hover at around $50 a barrel this year, rising from 2017, because of a looming deficit as investment in crude production had fallen too steeply and too fast.
There are already signs that output is falling sharply among higher cost producers, and the economic pain caused by cheap oil could eventually lead to price-inflating output cuts instead of a freeze to production when OPEC next meets again in June. Iran chose to stay home late Saturday after saying the day before it would send an emissary to the meeting.
Iran’s oil minister Bijan Zanganeh said over the weekend that other producers had to deal with the reality that Iran has returned to the oil market.
“They [Saudis] have the ability to raise output significantly”.
“If Iran freezes its oil production … it can not benefit from the lifting of sanctions”.
The cheap oil price has a huge impact on the economies of crude-producing countries, particularly the poorer ones like Angola, Nigeria and Venezuela. The kingdom seems determined to ride out the low prices that could squeeze Tehran.
Awkward statements from Saudi Arabia and Iran are eroding investor confidence.
“Time is not on OPEC’s side and technology is its biggest enemy”.
Advertisement
While the Doha meeting could have helped set the stage for a smooth recovery in energy markets, the road ahead now promises to be much more bumpy, given the glut of oil in the system. That has the potential to support prices.
