DOHA: Saudi Arabia demanded on Sunday that Iran join a global deal on freezing oil output, jeopardising the chances of an agreement between Opec and non-Opec producers that was supposed to prop up the price of crude.
Eighteen countries, including Russia, had been due to meet on Sunday morning in the Qatari capital to rubber-stamp a deal — in the making since February — to stabilise output at January levels until October.
But the meeting was postponed after Saudi Arabia, de facto leader of the Organisation of the Oil Exporting Countries, told participants it wanted all Opec members to take part in the freeze, according to sources.
Riyadh had earlier insisted on excluding Iran from the talks because Tehran had refused to stabilise production, seeking to regain market share after the lifting of Western sanctions against it in January.
With the deal running into trouble, oil ministers in Doha met Qatar’s Emir Sheikh Tamim bin Hamad al Thani who was instrumental in promoting output stability in recent months.
But a new draft seen by Reuters thereafter contained none of the binding points of the previous outline.
It said producers in and outside Opec should agree to freeze oil production at “an agreeable level” as long as all member countries and major exporting nations participated.
The prospects of a comprehensive deal, which would be the first between Opec and non-Opec countries in 15 years, looked slim.
“I am not sure you can call it a freeze,” an Opec source said.
An oil industry source said: “The problem now is to come up with something that excludes Iran, makes the Saudis happy and doesn’t upset Russia.”
Failure to reach a global deal would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices.
“If there is no deal today, it will be more than just Iran that Saudi Arabia will be targeting. If there is no freeze, that would directly affect North American production going forward, perhaps something Saudis might like to see,” said Natixis oil analyst Abhishek Deshpande.
SUPPLY GLUT: Brent oil has risen to nearly $45 a barrel, up 60 per cent 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 Deputy Crown Prince Mohammed bin Salman told Bloomberg that his country 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 countries should simply accept the reality of his country’s return to the oil market. “If Iran freezes its oil production... it cannot benefit from the lifting of sanctions.”
Published in Dawn, April 18th, 2016
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