By Michael Eboh
Negotiations in Doha between OPEC members and other oil producers ended without any agreement on limiting supplies, a diplomatic failure that threatens to renew the rout in prices.
Nigeria’s Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, told reporters after the meeting that there was no agreement, while he added that the possible freezing of oil output would next be discussed during the meeting of the Organization of Petroleum Exporting Countries members states in June in Vienna.The summit in the Qatari capital, which dragged on for more than ten hours beyond its initially scheduled conclusion, finished with no final accord.
Discussions stumbled after Saudi Arabia wouldn’t agree to any accord unless it included Iran, which wasn’t present at the meeting, according to a person familiar with knowledge of the matter.
”Given the expectations ahead of Doha, the failure to reach a freeze agreement is likely to cause an oil market selloff,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former White House official.
“The fact that Saudi Arabia seems to have blocked the deal is an indicator of how much its oil policy is being driven by the ongoing geopolitical conflict with Iran.”Sixteen nations representing about half the world’s oil output gathered in the Qatari capital in a bid to stabilize the global market, the first significant attempt at coordinating oil output between the Organization of Petroleum Exporting Countries and nations outside the group in 15 years. There were significant hurdles to any deal after Saudi Arabia’s Deputy Crown Prince said the kingdom wouldn’t agree to restrain its production without commitments from other major producers including Iran — which has ruled out freezing for now.Brent crude, which sank to a 12-year low in January, climbed almost 30 percent in the past two months as Saudi Arabia and Russia worked on the plan to cap crude production. With tensions visible throughout the negotiations, forty traders and analysts surveyed by Bloomberg last week were evenly split on whether a consensus would be reached. While analysts doubted that any accord would have a significant impact on the global oil surplus, the group’s inability to agree undermines any prospect of coordinated action to solve the market slump.
OPEC members will consult among themselves and with other oil producers until June, Qatar’s Energy Minister Mohammed Al Sada said at news conference after the meeting. The next scheduled bi-annual OPEC meeting is on June 2.
“If all major producers don’t freeze production, we will not freeze production,” Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman said in an interview April 14. “If we don’t freeze, then we will sell at any opportunity we get.”
The world’s largest oil exporter could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months “if we wanted to,” the prince said. The kingdom pumped 10.2 million barrels a day last month.
Iran, which is reviving oil exports after international 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.” The nation’s Oil Minister Bijan Namdar Zanganeh said Saturday he wouldn’t attend the Doha talks and won’t be a signatory to any deal as it would amount to self-imposed sanctions.
“It seems that, after all, the Saudis held their ground,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “Iran made it clear from the onset that it would reclaim market share first, and Saudi made it clear through the deputy crown price that their participation was conditional on Iran’s. The meeting was a non-starter to begin with.”
Brent crude settled at $43.10 a barrel Friday in London, having risen by more than 50 percent from a 12-year low in January. The failure could drag prices back down to $30 a barrel, Saxo Bank A/S estimated in a report on April 11.
“They are going to get a fairly big sell-off tomorrow,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd., a London-based consultant. Production losses in Kuwait due to an oil strike could limit drop, she said.