The disappointment in Doha at the weekend sent the price of oil tumbling. The world was left grappling with an excess of unwanted crude after 18 oil nations failed to agree on anything. Saudi Arabia – OPEC’s de facto leader – blamed Iran who weren’t even at the meeting. They wanted ALL producers to agree a freeze.
Failure to reach a deal sent Brent crude down almost 7 percent before recovering to almost $42 per barrel. But it was no where near the $80 a barrel OPEC would like. US crude futures also took a hit – losing more than 3 percent to nearly $39. North American shale exporters have been hard hit in recent months.
According to Vicky Pryce, CEBR Chief Economic Adviser, “The reality is that we now have such a disparate set of countries with different needs in terms of what sort of revenue they require and also in terms of what price the dollar per barrel each of them can live with. The Gulf states they now have huge costs because of the way they run the economy and so they actually need a higher oil price. There are others who can very happily survive from much lower oil price.”
OPEC took over a large chunk of Iran’s market share when sanctions were first imposed. Saudi Arabia in particularly is keen not to give it back. The impact of the failure is also a worry – oil prices had been recovering prior to the meeting. They’ve certainly been halted for now – and possibly longer.