OPEC countries fail to reach agreement on oil production

Negotiations ran into difficulty after Saudi Arabia, the largest exporter of oil, demanded rival Iran join the agreement to cap output.

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Oil prices have been in turmoil for almost two years.

An oversupply, among other things, has sent prices plummeting, straining the economies of many oil-exporting countries, from Angola to Venezuela and Nigeria.

The leading oil-exporting countries have tried to address the low level of prices at a meeting in Qatar.

But after five hours of negotiations, members of the Organisation of Petroleum Exporting Countries walked away with no agreement.

Qatar’s energy and industry minister, Mohammed bin Saleh al-Sada, spoke to journalists after the event.

“The meeting concluded that we all need time for further consultation from now till (the) June meeting of OPEC.”

Most members of the OPEC producers’ group, plus other oil exporters including Russia, attended the talks.

They want a deal which would freeze output.

But Saudi Arabia’s delegation appeared to step back from an agreement because of its geopolitical rival Iran.

Iran says it will not hold back on its oil production.

The Iranian government wants to regain the share of the market it lost as a result of international sanctions, recently removed.

But Mr al-Sada, from Qatar, has dodged questions about who is to blame for the breakdown in OPEC negotiations.

“Of course, respect their position, and, through further consultation, we still don’t know how the future will unroll. But it was a sovereign decision by Iran.”

Iran’s crude shipments have risen by more than 600,000 barrels a day this month.

In an interview with Iran state television, Iranian oil minister Bijan Zanganeh says the country’s position on the matter is clear.

“We can’t cooperate with them to freeze our own output — in other words, impose sanctions on ourselves.”

Iran made a last-minute decision not to attend the meeting, upsetting some other OPEC members.

But Mr Zanganeh has defended that move.

“The Doha meeting is for those who want to sign the plan to reduce output. But as we are not going to sign anything, and are not part of the decision to freeze output, we decided it was not necessary to send a representative. We support decisions made in Doha from here, and we congratulate them, and wish them the best, God willing.”

The current round of oil wars started last year when OPEC started flooding the market, aiming to take out the competition in United States shale oil and Canadian oil sands.

The price of crude oil is less than half of what it was in June 2014, when it reached US$115 dollars a barrel.

This week, it has been close to US$45 a barrel.

The OPEC agreement seemed simple: no cuts, just a commitment to no more increases.

The news had spooked investors on the local share market, with key energy companies Santos and Woodside Petroleum dropping 5.9 per cent and 2 per cent, respectively.

The Australian dollar, a commodity-backed currency, was losing value during the morning.

At the University of Sydney’s Centre for International Security, Dr Jennifer Hunt says observers did expect OPEC to come to an agreement.

“The other members were united in their desire to have this strategy mitigated somewhat, because their economies are suffering as a result. But, really, since Saudi Arabia is the world’s main swing producer, the other members are sort of stuck in sort of a quicksand. Any strategies they have to overcome it sort of deepen the glut.”

Australia has benefited from low oil prices for some time, both within business and at the bowser.

But Dr Hunt says it is unsustainable and Australians must be prepared for the eventual price climb.

“The sooner that businesses start to have an adjustment strategy back to a more reasonable oil price, the better it will be when this eventually happens. Now there’s been lots of speculation when this would occur. I think some progress was seen to be anticipated for this meeting. The next one isn’t until June, and, if the Saudis really hold out for Iranian cooperation, we could be seeing this situation continue to the end of the year.”