OPEC meeting ends without deal on oil production freeze

18 Apr 2016

OPEC meeting ends without deal on oil production freeze


Doha, Qatar - The world's biggest oil producers have failed to reach an agreement at a meeting seeking to freeze output and reassure markets that a recent recovery in prices can be sustained.

Sunday's talks in Qatar's capital saw the Organisation of the Petroleum Exporting Countries (OPEC) - and, unusually, other producers - trying to agree that average daily crude oil production in the coming months would not exceed levels recorded in January.

Qatari Energy Minister Mohammed Saleh al-Sada said after six hours of negotiations that consultations would continue between the parties until an OPEC meeting in June.

"All participating countries will consult among themselves and with others," he said.

Oman's Oil Minister Mohammed al-Rumhy said one reason a deal was not reached was that not all OPEC members were present.

"Until this morning we thought there would be a deal. We didn't know Iran wasn't coming," he told Al Jazeera.

After 6 hours of meeting, OPEC secretary general left without saying a word.

— Basma Atassi | بسمة (@Basma_) April 17, 2016

The run-up to the summit saw months of disagreements about the impact any freeze would have on individual OPEC members.

The position of Iran - now ramping up production after Western sanctions were lifted as part of the nuclear deal it signed with world powers - had proven a sticking point, with diplomats and officials at the talks telling Al Jazeera that Saudi Arabia was insisting Tehran should sign up to any agreement.

Iran, though, did not send a delegation to the meeting, saying it would not accept proposals to cap its production until it recovered a similar market share to that which it held before the sanctions were imposed. 

Uncertainty and volatility

Countries such as Ecuador and Venezuela have been hardest hit by plummeting prices. Venezuela has seen its worst recession since the 1940s, and its economy is expected to shrink by 10 percent this year. 

Larger OPEC producers such as Saudi Arabia, though, have insisted on keeping production levels high, because they do not want to lose customers to non-OPEC producers like the United States. 

"Countries came to the summit with different interests and therefore, the prospects of a deal were low," Abdurahim al-Hor, a Doha-based economist.

He said oil prices are expected to go down as no cap on output was agreed - possibly down to $35 a barrel, compared to the current $40.

"The price has been fluctuating with a big margin before, between $20 and $40 in January, so the decrease now could also be big," he said.

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Despite tanking prices and a glut in global supplies, OPEC members had previously increased production levels as disagreement grew about which strategy to take.

The bloc is made up of Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. 

Qatar's government currently holds the OPEC presidency.

Inside Story - What are the risks of not capping oil production?

Source: Al Jazeera


News Source: Aljazeera, 9jaTales

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