The OPEC and non-OPEC oil freeze meeting which held in Doha, Qatar met with a brick wall after the parties failed to agree on a freeze deal to boost price. The conference’s failure sent crude prices tumbling in early trading on the NYMEX, which fell by more than six percent as traders resumed the commodity’s sell-off. Before the meeting, doubts were cast on minds after Iran made a last minute decision not to attend.
Also, Saudi Arabia vowed not to freeze production unless other major producers did the same. Amidst disagreement between Iran and Saudi Arabia , nearly 20 of the world’s largest oil exporters could not find enough common ground to hold the line on output after marathon talks.
Mohammed Saleh al Sada, Qatar’s oil minister, told reporters that the group “needs more time” to construct the outlines of a deal to freeze output. However, he cited “improved fundamentals” as a reason why an immediate agreement wasn’t necessary. Earlier in the day, a draft accord proposed to hold output at January levels until at least October. The dynamic has left the world awash in oil supply that has sent prices reeling.
All eyes now turn to June’s meeting of OPEC countries, where the cartel’s hand may be forced if crude prices begin another downward spiral. The failure of the summit could also lead to a renewed drop in crude prices, which only recently have begun to recover. John Kilduff, a partner with Again Capital, said the breakdown in Doha was not a surprise. “They were locking in record production so it made no sense,” he said of the Doha deal.
“It seemed like a farce from the start and it turned out to be exactly that.” Recently, oil prices have crept up from multi-year lows below $30, to levels just above $40 on Friday. Brent crude, however, is far below a multi-year high above $100 set in 2014, and is down nearly 40 percent over the last year. The latest rally, which took crude 55 percent from its lows, was in part fueled by optimism producers would reach a deal to freeze production.
Tehran is strongly resistant to the idea of an output freeze, as it attempts to recoup lost market share after being freed from the yoke of Western sanctions. With the country declining to participate, the meeting’s delegates appeared to doubt how effective a freeze could be if it did not include Iran.