BY Fraser Tennant
The price of oil has fallen after a meeting of the world’s major oil producers – the Organisation of the Petroleum Exporting Countries (OPEC) – ended in failure.
The meeting, held in Doha, Qatar on 17 April with most (but not all) OPEC members present, had intended to sign a deal to cap oil output. However, it concluded with no agreement being made – an outcome which is being largely attributed to tensions between Saudi Arabia and Iran.
Prior to Doha, Saudi Arabia had demanded that Iran sign up to the deal to freeze oil productions, but Iran (a non-attendee) is unwilling to do so and has stated that it will continue to increase output following the lifting of a number of sanctions.
In a statement, the Iranian government said that as it was “not going to sign anything” and was "not part of the decision to freeze output”, it had decided not to send a representative to the OPEC meeting.
“It doesn’t come as a huge surprise to me that the talks could not reach a conclusion, given Iran and Saudi Arabia’s previously stated positions, which they stuck to," said Clare Munro, a partner at Brodies LLP and head of the firm’s oil and gas team in Aberdeen, Scotland. “However, it does demonstrate the pressure on the various countries involved, which leads me to believe that at some point a deal will be achieved."
Just a few days prior to the aborted talks, Brent crude had climbed to a four-month high of just under $45 per barrel – an increase that reflected global market hopes that a deal to cap oil output would hold crude oil production at the January 2016 level and slow the oversupply.
Ms Munro continued: “Although the oil price did suffer a set-back, Brent remains above $40, which is better than where we have been for most of the year so far.”
Addressing the failure of the OPEC meeting, Dr Mohammed Bin Saleh Al-Sada, Qatar’s minister of Energy and Industry, said his administration respected the Iranian position and that the freeze “could be more effective if major producers, be it from OPEC members like Iran and others, as well as non-OPEC members, are included".
Ultimately, the major oil producers concerned required “more time” to agree a deal, admitted Dr Al-Sada.