OPEC summit: Riyadh-Tehran row blocks deal on oil output
The meeting in Doha, Qatar, ends in an impasse with production freeze put off to June. The failure is due to an Iranian-Saudi geopolitical row. Markets react with prices and shares falling.
Doha (AsiaNews/Agencies) – Oil prices dropped today after leading oil exporters were unable to agree on capping production at a meeting in Doha (Qatar).
Most members of the OPEC producers' group, plus other oil exporters including Russia, attended the meeting.
The talks failed as a result of tensions between Iran and Saudi Arabia, whose negative repercussions also undermined the summit of the Organisation of the Islamic Conference (OIC) in Istanbul.
After hours of talks, Qatar's Energy Minister Mohammed bin Saleh al-Sada said that the oil producers needed "more time".
Russia's Oil Minister Alexander Novak said Moscow had not closed the door on a global deal to freeze output, but said he was disappointed at the failure to reach a decision as he had travelled to Qatar expecting to sign a deal, not debate one.
Capping production was seen by many analysts and experts as a minimum. However, to boost prices, a cut in output would be necessary.
Over the past two years, exporters have suffered billions of dollars in lost revenue, and have had to cut back on spending to stop burgeoning deficits. This in turn has led to domestic protest.
For example, in OPEC’s fourth-largest oil producer Kuwait, thousands of oil and gas workers are striking to protest against pay cuts.
That the Doha summit would end without a deal was could be expected given Iran’s stance.
"As we're not going to sign anything, and as we're not part of the decision to freeze output, we ultimately decided it was not necessary to send a representative," the Iranian government said before the meeting.
Iran, which only recently returned to world oil markets after the lifting of nuclear-linked Western sanctions in January, has plans to increase its own production as it seeks to regain pre-sanctions market share.
For Qatar’s energy minister, “The freeze could be more effective definitely if major producers, be it from OPEC members like Iran and others, as well as non-OPEC members, are included in the freeze."
Now everything has to wait until the next OPEC meeting, scheduled for June.
The effect on oil futures was immediate. US benchmark West Texas Intermediate for May delivery was down 7 per cent to about US$ 39 a barrel.
In Europe markets opened sharply lower, before recovering. In Asia, Tokyo dropped 3.4 per cent, whilst Shanghai was down 1.44 per cent. Wall Street opened with minor losses.