North Sea crude oil prices could be in for a rocky ride today when markets re-open following the reported failure of major global oil producers to agree to a voluntary reduction in output.
Reuters reported last night that OPEC and non-OPEC producers on Sunday failed to reach a deal to freeze oil output, saying sources said OPEC producers had told non-OPEC members they needed first to reach a deal within OPEC, possibly at a June meeting.
After that, the Organisation of the Petroleum Exporting Countries will be able to invite other producers to join.
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.
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.
Crude oil prices have rallied by some 10% to the $mid-40-barrel level amid hopes of such a deal.
Consequently, markets may turn bear-ish when trading opens again today as dealers digest the failure of these talks.
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