So much awaited Doha talks proved to be a failure as expected on the ground of the never ending dispute between Saudi Arabia and Iran.
Major oil producing and exporting countries like Russia, countries of the OPEC (Organization of the Petroleum Exporting Countries) met in Doha, Qatar to discuss the possible oil production cut, as the situation on the oil market became unpleasant for couple of countries, while the other were losing profit from their investments.
Nevertheless, the key player, spurring the last turmoil on the market – Iran, did not attend the meeting as the country announced already before, that it is interested in gaining its previous position on the oil market primarily and then it may participate on an oil production freeze.
The already existing tension between Saudi Arabia and Iran was only confirmed in this way, continuing from previous incidents we coudl see couple of months ago (execution of a Shiite ecclesiastical dignitary in Saudi Arabia, attack on embassy of Iran in Yemen, etc).
But Doha confirmed one serious fact – importance of the other OPEC members is still pretty low and it’s all about Saudi Arabia most of the time, as the major enemy of Iran in the frame of oil market.
As the International Energy Agency (IEA) informed, it believes that this lost deal won’t have any strong impact on the global supply. According to the EIA statement: “With Saudi Arabia and Russia already producing at or near record rates and very little upside seen apart from Iran any deal struck will not materially impact the global supply-demand balance during the first half of 2016.”
But what is more important is the outlook on global demand, which is expected to be stuck, according to the EIA. 2016 growth in global oil demand is expected to ease to around 1.2 million barrels per day (bpd), what is a huge decline from the previous year, when it reached 1.8 million bpd increase.
Immediate impact of the Doha talks failure caused both major oil benchmarks to drop over 5% on Monday. At the time of writing, West Texas Intermediate futures were seen trading 3% lower at $39.15 a barrel, while the European benchmark – Brent crude oil futures were seen 2.5% lower at $42.07 per barrel.
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