RIYADH: We cannot and will not take up the responsibility of balancing the markets — single handedly — Opec told the eagerly awaiting world after its ministerial last Friday at its headquarters in Vienna. To kick-start the process, others will have to join in and contribute to the effort.

Fireworks inside the meeting room were very much palpable. Expected to last four hours, it went on for almost seven.

Opec members demanding output cuts, such as Iran and Venezuela, were unwilling to offer production cuts themselves, while Saudi Arabia and the Gulf Arab states, remained insistent; others too need to come forward before a process could be initiated.

And thus the ceiling was rolled over. “Effectively, it’s ceilingless,” said Iranian Oil Minister Bijan Namdar Zanganeh. “We aren’t going to go back to a cartel and work against the customers - that time has passed,” prompted United Arab Emirates Minister Suhail Al Mazrouei.

Most of the market “doesn’t have any ceiling,” Iraqi Oil Minister Adel Abdul Mahdi told reporters. “Americans don’t have any ceiling. Russians don’t have any ceiling. Why should Opec have a ceiling?”

And yes — in this entire process — drama too was palpable — with many twists and turns.

Oil prices were lifted on Thursday, a day before the Opec meeting, by the Energy Intelligence report that Saudi Arabia would propose a production cut if non-Opec members, such as Russia, also adhere to the cut. Many took this as a sign of softening of Saudi stance.

Although the report was widely circulated, yet, on a closer look, there were many ifs and buts to it. Indeed the proposal, if at all on the table, was not something new or out of blue. Saudi Arabia has been insisting from day one; it was ready to act in coordination with other Opec and non-Opec members. The position is widely known. Saudi Arabia and its allies could not and should not be expected to cut back their output, while others continue to play as usual.

The meeting day was no different. Saudi Arabia is willing to cooperate with anyone to re-balance the market, Oil Minister Ali Naimi told reporters on Friday as ministers arrived at the Opec headquarters to discuss its next move.

Eyes were hence focused on Iran and Russia. Would they be ready to coordinate and participate in the efforts to stabilise the markets? The answer appeared a simple no — making the possibility of an output cut almost redundant.

“We do not accept any discussion about increases of Iran production after the lifting of sanctions. It is our right and anyone cannot limit us to do it. We will not accept anything in this regard,” Iranian Oil Minister Bijan Zangeneh told reporters in Vienna, prior to the ministerial, adding, it’s only willing to discuss curbs on output after its production reaches 4 million bpd, more than 1 million bpd above current levels.

On the other hand, Russian oil minister Alexander Novak told local news agency RIA that he saw no need for Moscow to decrease oil production.

Any possibility of a coordinated output cut hinged, to a great extent, on some sort of understanding between Saudi Arabia and Russia. That was simply missing.

The gaps between the two remained wide open. In the ongoing conflict in Syria, Riyadh and Moscow are on the opposite sides. On the issue of Iran too, the differences between the two is widely known. And the two countries are also competing for a larger share in the Asian and the European energy markets.

In the meantime, an internal Opec document, viewed exclusively by the Wall Street Journal, warned the members that oil prices will remain under pressure in the near future while markets would remain oversupplied even if the group cut its output.

Hence the euphoria, generated by the Energy Intelligence report, began subsiding within hours. Prior to the commencement of the meeting on Friday, Minister Ali Naimi said “it is baseless that there is a Saudi coordinated proposal to cut output.”

And that was the proverbial last nail. In the absence of any overtures by other producers, any such proposal was simply not on the table — one could now safely deduce.

Published in Dawn, December 6th, 2015