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.
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 and other Gulf nations wouldn’t agree to any deal unless all OPEC members joined including Iran, which wasn’t present at the meeting, Russian Energy Minister Alexander Novak told reporters afterwards.
“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 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, the world’s two largest crude producers, worked on the plan to cap 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.
Russia was surprised that there wasn’t an agreement, said Novak. Officials from Saudi Arabia, Qatar, Venezuela and Russia -- who initiated the push for a freeze in February -- agreed to a draft accord on Saturday, but some countries changed their position right before the summit the following day, leading to “hot discussions,” he said.
A freeze could have sped up the rebalancing of the market by six months, which may now take until mid-2017, Novak said in a press conference after the talks.. The “door is not closed” to a future accord, although “Russia won’t be as optimistic as before,” he said.
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.