A meeting of leading oil exporting countries in Qatar, called to address the low level of prices in the international market, has run into difficulties.
BBC reports from Qatar’s capital, Doha, say the problem is tension between Saudi Arabia and Iran.
The reports said agenda for the meeting is whether to freeze production levels.
While Iran has consistently refused to take such steps , Saudi officials have at times appeared willing to take such action only if Iran were to as well.
The meeting is a response to the fall in prices which began in June 2014. The price is now less than half what it was then, though in the last few weeks it has risen from its lowest levels.
Most members of the exporters’ group Organisation of Petroleum Exporting Countries (OPEC), together with some other oil producers, are meeting in Doha to discuss freezing output.
No cuts in other words, just a commitment to no more increases.
But even that possibility has given some support in recent weeks to the price of oil. The low it reached earlier this year was about $27 a barrel for Brent crude oil, one of the leading international market prices.
This week it has been very close to $45. That is to a large extent due to traders considering the possibility that some oil producers are close to taking some sort of action to push prices higher.
It’s worth emphasising that even at current levels the price of oil is far below where it was as recently as June 2014 – when it reached $115.
The fall has hurt many oil producing countries. Earlier this week, the International Monetary Fund said it had damaged financial stability and the government finances in many of them.
he meeting is not formally an OPEC event, though most of the group’s members are being represented. There will also be some non-members, notably Russia.
One important OPEC member not there is Iran.
As the country emerges from western sanctions, the Iranian government wants to regain the share of the market that it lost as a result of those restrictions on its international sales.
Iranian officials have repeatedly made it clear they have no intention of participating in a production freeze, though they appear happy to support others doing it. Iran has not sent a delegation to the Doha meeting.
This reluctance on Iran’s part has led to friction with Saudi Arabia, the word’s biggest oil exporter.
Saudi Arabia’s Deputy Crown Prince has said that a freeze could only happen if Iran takes part. But there are doubts about whether this really is the Kingdom’s last word.
The decision to hold this meeting, with a rather unusual group of attendees, reflects the oil exporters’ persistent concerns about the level of prices and a feeling that any action needs to involve more than just the members of OPEC.
Two of the world’s leading producers are not going to be there: the US and China.
Both countries have large oil production industries, but they use nearly all of it themselves, and have to import extra to meet their own needs. Their economies overall tend to benefit from cheaper oil so they don’t have a shared interest with those who will be turning up in Doha.
Still, there is more than enough oil production that will be represented there to make a substantial difference to the global market if the participants chose to take strong action.
What many oil analysts say, however, is that they aren’t talking about action that is going to achieve much. In the past, OPEC has often managed to agree and deliver cuts in production. This time all that’s on the table is a potential agreement to refrain from further increases.
Photo: Reuters
