oil prices are exposed to anew shock, after falling more than five percent on the back of the failure of the major oil producers in the Qatari capital Doha To reach an agreement to freeze oil production, this collapse was occurred after the representatives of 18 countries from the major oil producers on Sunday , April 17, concluded their consultations in Doha to discuss the freeze of production, without reaching an agreement.
According to the oil market data , Crude oil Brent Futures contracts are dropped around six percent in early trading on Monday before recovering to $ 41.29 a barrel at 0508 GMT , but still low by 4.2 percent from the last settlement price. And futures contracts for US crude are declined 4.63 percent to $ 38.49 a barrel.
The barrel of West Texas – Intermediate, for May delivery, two dollars and twenty cents , or 5.45 percent from the closing price on Friday of $ 38.16, while a barrel of Brent lost, June delivery, two dollars and 23 cents ie 5.17% to $ 40.87.
It is again , the differences are emerged within the organization at the meeting where the OPEC member -Iran was absent from the meeting, and the participants called on the need of the commitment of all member States of the decision to freeze oil production, most notably Iran.
Saudi position was clear where Riyadh refused to limit its production unless other states have taken similar action, and of course will not be affected by any decision to freeze, where still maintains a market share estimated at 10.3 million and 10.4 million barrels a day.
Iran’s oil minister said Iran would not give up in any way for its share of the production, in reference to the level of production and export of oil before the imposition of international sanctions, which were lifted in January under the deal over its nuclear program , which was reached with the countries of the six groups.
Reuters reported that Saudi Arabia , the biggest producer in OPEC- informed the attendee that it wants to share all the members of OPEC in the freeze agreement, including Iran , which were absent from the meeting.
apparently that the call of Riyadh to the need for the participation of all members of OPEC aims that this meeting to acquire the feature of seriousness and commitment of any decision by it , and thus will contribute to reaching an agreement to fix the production.
The participants in the meeting , which lasted six hours , concluded that the participating countries needed “more time” for consultations, to be looking the market situation at the next meeting of OPEC in June next year.
the Russian position , the Russian oil minister Alexander Novak , who confirmed that the door has not been closed to reach an agreement to fix the production in the future, and predicted that the oil markets will be gradually balanced even without fixing the production agreement.
sources in OPEC noted that the participation of Iran in the fixing the production during the next OPEC meeting will open the door to resume talks with producers from outside the organization and therefore the return of balance of the market.
the oil market ‘s analyst at “Natksys” Abhishek Deshpande favored that the decrease of the market confidence in OPEC ‘s ability to take reasonable action to adjust supply, which will push the oil market to retreat, because the expectations of reaching an agreement were among the reasons for the rise of prices recently.
the analyst said balancing of the markets may be delayed to mid – 2017 in the absence of agreement to fix the production.
The US bank Morgan Stanley said that “the lack of even a non-binding agreement after an agreement in February confirms the poor state of relations of OPEC.”
He added “We see now a growing threat to an increase in OPEC supply.”
And here , we point out that the draft decision to freeze production was under preparation since February to fix the crude production at January levels until October.
Here we refer to the close relationship between what happened during a summit of Islamic cooperation , which was held in Turkey and what was included of the final statement t, to denounce the ongoing support of Iran for terrorism and its interference in the affairs of the region and of course it was expected from Tehran to take rigid attitude towards participating in the Doha meeting, and the Iranian president and his accompanying delegation involved in the final meeting of the summit in protest at the charges, and accused Saudi Arabia that it had a clear role in influencing the Islamic countries in this decision.
it is noteworthy that Saudi Arabia, Russia, Venezuela and Qatar agreed last February to freeze the production ceiling when in the last January levels, and stressed at the time that the agreement is subject to be joined by other producers.
As we predicted in a previous article that the Doha meeting will not make any important change in the markets of oil , which is what happened yesterday at the Doha meeting, where the hopes of investors and producers have gone up in smoke alike because of political and economic factors plaguing relations among the producing countries, especially between the Saudi giant the world ‘s oil , which insists on the need for the participation of all producers in the decision to freeze production, and Iran , which was absent from the meeting , and rejects the decision entirely up to be back to the level of production to pre – imposition of international penalties on it , and here the question must be ; are the coming days will witness more clashes in the oil markets?.
Rawabet Center for Research and Strategic Studies