Dubai: Amid low expectations following mixed statements, all eyes will be on more than 15 Opec and non-Opec producers as they touch down in Doha after a gap of 15 years to discuss freezing oil output at January levels. even as Saudi Arabia hinted it might flood the market if no deal is reached.
The biggest Opec producer has said they are willing to freeze their output at a little over 10 million barrels of oil per day if a deal is reached. but would require Iran to also freeze production. Iran’s oil minister Bijan Zanganeh, on the other hand, has said his country will reject any limits on output before it production reaches pre-sanctions levels. Iran has dismissed the notion of joining the freeze as “ridiculous”. Oil prices reacted negatively over news that Iran’s Opec governor will attend the meeting in place of its oil minister.
However, Qatar said last week that there was an “atmosphere of optimism” that a deal would be struck, adding that the number of countries due to attend had risen.
“Ahead of the Doha meeting, comments from officials indicate the urgent need of coordinated action,” said Vaqar Zuberi, Portfolio Manager & Senior Analyst within Mirabaud Asset Management’s Hedge Fund team.
“Attempts to “flood” markets on the part of any producer would likely not garner support from other oil producers, and have limited impact on the production levels in the medium term of US shale oil companies amid low prices,” Zuberi said.
Brent crude fell the most in two weeks on Friday, extending its fall a third session. Brent ended 1.69 per cent to end at $43.10. Crude oil has rallied more than 30 per cent since an agreement was first mooted in February.
All the volatility in prices have been impacting the economies of oil producing countries. In March, Moody’s Investor Service placed ratings of oil producing countries including Saudi Arabia under review as the ratings agency expects a drawdown on public finances amid low oil prices. Saudi Arabia’s creditworthiness was downgraded by Fitch, maintaining a negative outlook which indicates the possibility of more downgrades.
Not concerned
Saudi Arabia’s Deputy Crown Prince Prince Mohammad Bin Salman has said “if prices went up to $60 or $70, that would be a strong factor to push forward the wheel of development.”
“But this battle is not my battle. It’s the battle of others who are suffering from low oil prices.” Prince Mohammad also said that Saudi Arabia isn’t concerned because “we have our own programs that don’t need high oil prices.”
