Talks in Doha between some of the world’s biggest oil producers on freezing production dragged on into the evening amid disagreements on the wording of the accord, in part to address Saudi Arabia’s insistence that Iran be included in any deal.
As the summit in the Qatari capital continued more than eight hours beyond its initially scheduled conclusion, discussions centered on the final wording of a rewritten draft to freeze output at “an agreeable level” as long as all OPEC countries and other major producers join, said three people with knowledge of the matter, who asked not to be identified because the talks were private.
Sixteen nations representing about half the world’s oil output have gathered in the Qatari capital in a bid to stabilize the global market, the first significant attempt at coordinating oil output between the Organization of Petroleum Exporting Countries and nations outside the group in 15 years. On April 14, Saudi Arabia’s Deputy Crown Prince said the kingdom wouldn’t agree to restrain its production unless other producers, including Iran, agree tofreeze. Iran, which along with OPEC-member Libya isn’t attending the meeting, has ruled out joining the accord for now.
Crude oil has rallied since the freeze was first proposed in February. Failure to reach an agreement would lead to a “severe” drop in prices, Citigroup Inc. predicted before the meeting. Brent crude settled at $43.10 a barrel Friday in London, having risen by more than 50 percent from a 12-year low in January.
While analysts agreed any accord to emerge from Doha would have little impact on actual crude supplies because most attendees were already pumping at capacity, an oil workers’ strike in Kuwait was already having an effect.
The nation’s crude production tumbled 60 percent to 1.1 million barrels a day and refineries scaled back operations because of the open-ended action over pay, said Saad Al-Azmi, deputy chief executive for finance and spokesman at Kuwait Oil Co. The disruption is equal in size to the global surplus and could boost prices on Monday, Dubai-based bank Emirates NBD PJSC predicted.
“Discussions are at a very high level between the Saudis, Russians and Gulf countries,” over Iran’s output, Wilson Pastor, Ecuador’s governor to OPEC, said in a Bloomberg Television interview in Doha before the start of formal talks. “The general agreement is in place,” but there were some disagreements on the wording, including details yet to be finalized on monitoring the accord and a follow-up meeting, he said.
Ministers held informal closed-door talks earlier Sunday, while delegates also visited the palace of the Emir of Qatar. Everybody is tired, but negotiations continue in hope of a deal, said one official present at the meeting. There has been tough wrangling over the wording of the accord, said another attendee.
Iran is restoring exports after sanctions over its nuclear program were lifted in January. It plans to boost output to 4 million barrels a day in the Iranian year through March 2017, Oil Minister Bijan Namdar Zanganeh said April 6. That would be an increase of about 800,000 barrels a day from March production. The nation’s crude shipments have risen by more than 600,000 barrels a daythis month, according to shipping data compiled by Bloomberg.
“If all major producers don’t freeze production, we will not freeze production,” Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman said in an interview April 14. “If we don’t freeze, then we will sell at any opportunity we get.”
Saudi Arabia, the world’s biggest crude exporter, would cap its market share at about 10.3 million to 10.4 million barrels a day, if other producers agreed to the freeze, the prince said at King Salman’s private farm in Diriyah. The world’s largest oil exporter could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months "if we wanted to," he said.
“We coordinate with all producers and we are very positive with them,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force. “Our problem is only with those who don’t want to work with us.”
Iran’s Zanganeh said Saturday he won’t attend the Doha talks and won’t be a signatory to any deal as it would amount to self-imposed sanctions on the country which is restoring crude production after the removal of a ban on its shipments.