29 Mar 2024
Monday 18 April 2016 - 16:55
Story Code : 210094

What led to failure at Doha and how will it affect oil

Oil tumbled to two-month lows on Sunday after the worlds biggest producers failed to agree on freezing oil production. This lack of unanimity threatens to trigger a harsh drop in prices and may lead to the demise of OPEC in its present form.

Oil ministers ofRussia, Saudi Arabia, the United Arab Emirates, Venezuela, Algeria and eleven other nations gathered inthe Qatari capital atthe weekend ina bid tostabilize the global market.

However, the attempt, which stretched a good ten hours beyondits initially scheduled conclusion, failed afterSaudi Arabia and several other Gulf nations refused tosign a deal unless all OPEC members joined including Iran, which wasnt present atthe meeting.

A number ofOPEC countries, namely Saudi Arabia, the United Arab Emirates, Kuwait and Qatar, who agreed toa draft accord onSaturday, changed their position right beforethe summit the followingday, leading to hot discussions, Russian Energy Minister Alexander Novak told RIA Novosti.

Delegates said Saudi Arabia had ineffect torn upan earlier draft ofthe deal afterDeputy Crown Prince Mohammed bin Salman said the kingdom wouldnt restrain its production withoutcommitments fromother all other major producers including Iran, which has ruled outfreezing fornow.

Earlier inApril, the Saudi Prince also predicted the looming twilight ofthe oil age and shared the countrys plans totransform the oil state intoa country which will not depend onthe black gold.

Tehran had refused tojoin the freeze, stressing that the sanctions had been lifted recently and Iran wanted torebuild its oil exports topre-sanctions levels.

The next oil meeting would be held inJune afterthe cartel members agreed concerted position onthe proposed freeze, according toNigerian Oil Minister Emmanuel Ibe Kachikwu.

Failed talks inDoha led toa noticeable drop inoil prices withcrude losing more than5 percent onMonday morning inAsia.

Brent, the international benchmark, was down5.2 percent at $40.87 a barrel while West Texas Intermediate, the US marker, shed 5.7 percent to $38.07 a barrel.

Oil prices may go downto $30 a barrel. If the oil producing nations agreed tofreeze their output something they pledged todo back inFebruary the prices would go upto $45 per barrel and could even spike to $50 if Iran joins in.

By Sputnik News
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