Saudi-Iran tensions scupper deal to freeze oil output | Reuters - Firstpost
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Saudi-Iran tensions scupper deal to freeze oil output | Reuters


DOHA A deal to freeze oil output by OPEC and non-OPEC producers fell apart on Sunday after Saudi Arabia demanded that Iran join in despite calls on Riyadh to save the agreement and help prop up crude prices.

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 stabilize 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 stabilize production, seeking to regain market share after the lifting of Western sanctions against it in January.

After five hours of fierce debate about the wording of a communique - including between Saudi Arabia and Russia - delegates and ministers announced no deal had been reached.

"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 LCOc1 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."

(Reporting by Rania El Gamal and Reem Shamseddine; Additional reporting by Sam Wilkin, Katie Paul and Tom Finn; Writing by Dmitry Zhdannikov and Andrew Torchia; Editing by Dale Hudson)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Apr 18, 2016 01:00 IST

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