Oil meeting in Qatar ends without freeze – Saudi-Iran tensions scupper deal to freeze crude output

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DOHA, Qatar, April 17, (Agencies): Oil-rich nations at a Qatar summit failed to reach an agreement Sunday on a production freeze, saying officials needed “more time” to make the decision as Iran stayed home and vowed to keep pumping.

The hourslong meeting in Doha, the Qatari capital, resembled a failed OPEC meeting in December that saw crude oil prices tumble on the cartel’s indecision. The fact that producers couldn’t agree to even freezing production at near-record January figures likely means oil prices will drop again as markets open Monday.

Speaking to journalists after the summit, Mohammed bin Saleh al-Sada, Qatar’s energy and industry minister, said the 18 countries gathered for the meeting believed “the fundamentals of the market are generally improving.”

However, he largely dodged the questions about whether another special summit will be called before OPEC’s next meeting in June and whether Iran had anything to do with the breakdown of the talks.

“We of course respect their position and … we still don’t know how the future will unroll but it was a sovereign decision by Iran,” said al-Sada, who is serving as OPEC’s president. “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.”

Sunday’s gathering follows a surprise Doha meeting in February between Qatar, Russia, Saudi Arabia and Venezuela, in which they pledged to cap their crude output at January levels if other producers do the same.

They had hoped the cap would help global oil prices rebound from their dramatic fall since the summer of 2014, when prices were above $100 a barrel.

Prices dropped briefly to under $30 a barrel, a 12-year low, in January, but have climbed to the mid-$40s this week, boosted in part by market speculation about the Qatar meeting.

Western markets were closed Sunday and not immediately affected by the discussions, though the failure to reach a freeze likely will come into play Monday. Stock exchanges in Saudi Arabia and Dubai closed in negative territory Sunday, with the Saudi Tadawul down 1.48 percent.

The development will revive oil industry fears that major producers are embarking again on a battle for market share, especially after Riyadh threatened to raise output steeply if no freeze deal were reached.

Some 18 countries, including non-OPEC Russia, gathered in the Qatari capital of Doha for what was expected to be the rubber-stamping of a deal – in the making since February – to stabilise output at January levels until October 2016.

But OPEC’s de facto leader Saudi Arabia told participants it wanted all OPEC members to take part in the freeze, including Iran, which was absent from talks.

Tehran had refused to stabilise production, seeking to regain market share after the lifting of Western sanctions against it in January.

“We need more time to reach an agreement among all OPEC members and main producers to freeze production, which can be by June,” one OPEC source said.

The failure to reach a global deal could halt a recent recovery in oil prices.

“With no deal today, markets’ confidence in OPEC’s ability to achieve any sensible supply balancing act is likely to diminish and this is surely bearish for the oil markets where prices had rallied partly on expectations of a deal,” said Natixis oil analyst Abhishek Deshpande.

“Without a deal, the likelihood of markets balancing are now pushed back to mid-2017. We will see a lot of speculators getting out next week,” he added.

Brent oil has risen to nearly $45 a barrel, up 60 percent from January lows, on optimism that a deal would help ease the supply glut that has seen prices sink from levels as high as $115 hit in mid-2014.

Saudi Arabia has taken a tough stance on Iran, the only major OPEC producer to refuse to participate in the freeze.

Deputy Crown Prince Mohammed bin Salman told Bloomberg that the kingdom could quickly raise production and would restrain its output only if Iran agreed to a freeze.

Iran’s oil minister Bijan Zanganeh said on Saturday OPEC and non-OPEC should simply accept the reality of Iran’s return to the oil market: “If Iran freezes its oil production … it cannot benefit from the lifting of sanctions.”

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