The Doha conclave of top oil producers failed to agree on oil production cut after Saudi Arabia insisted on Iran’s nod after the latter boycotted the meeting. The outcome led to a further plunge in oil prices.
Speculation was rampant that Saudi Arabia will take the initiative in persuading members of the Organization of the Petroleum Exporting Countries (OPEC) for a production cut.
A freeze deal among non-OPEC countries and OPEC members was speculated after Russia stepped up initiatives to shore up prices from the January low of $26 a barrel.
The Wall Street Journal reports that some of the discussions in the meeting at times stooped to bickering.
In a dramatic turn of events, Saudi Arabia’s powerful deputy crown prince, Mohammed bin Salman on late Saturday stated that no freeze deal would be possible without Iran on board. It also signaled the arrival of a new power center in oil affairs above the veteran oil minister of Saudi Arabia Ali al-Naimi.
Saudi officials had been mulling that the Kingdom is open for a production cut even without Iran’s support and had circulated a draft agreement.
However, on early Sunday morning, Saudi oil minister Ali al-Naimi received a call from Riyadh and he informed delegates that they have to scrap the draft agreement as it did not include Iran.
“Since 1995, it’s been all about Ali al-Naimi, and he seems to have been overruled by his boss,” noted Michael Wittner, global head of oil market research at Société Générale.
Saudi’s new body—the Council for Economic and Development Affairs was set up by King Salman bin Abdul-Aziz in January 2015 to oversee the oil industry with his son appointed to manage ad administer it.
A report in CNBC presented Iran’s viewpoint and said Tehran is opposed to the idea of any output freeze as it wanted to regain the market share lost under Western sanctions.
“With Iran, we respect their position and through further consultation, we don’t know how their future will unroll,” Mohammed Saleh al-Sada, Qatar’s minister said.
Meanwhile, the US Energy Information Administration said US crude production has fallen by 90,000 barrels a day in March, compared to February. Falling shale production may help OPEC to raise prices, according to experts.