Oil freeze agreement faces trouble as Saudi-Iran tensions spike
According to sources, experts were trying to find an acceptable solution to the problem that had held up the talks between OPEC and non-OPEC members to freeze oil output.
A meeting between OPEC and non-OPEC oil producers on an agreement to freeze output ran into last-minute trouble in Qatar on Sunday due to what looked like a new spike in tensions between Saudi Arabia and Iran, sources told Reuters.
Oil ministers met with the Qatari emir, Sheikh Tamim bin Hamad Al-Thani - who was instrumental in promoting output stability in recent months - in an attempt to rescue the deal designed to bolster the flagging price of crude.
According to two sources, Saudi Arabia said it wanted all Organisation of Petroleum Exporting Countries (OPEC) members to participate in the talks, despite insisting earlier on excluding its regional arch-rival Iran because Tehran had refused to freeze production.
"The Saudis changed everything early this morning," an OPEC source said. "They want all OPEC members to join first."
Failure to reach a global deal - the first in 15 years between OPEC and non-OPEC nations - would signal the resumption of a battle for market share between key producers and likely to halt a recent recovery in prices.
Brent oil has risen to nearly $45 a barrel, up 60% from January lows, on optimism that a deal would help ease the supply glut that has seen prices sink from levels as high as $115 hit in mid-2014.
Saudi Arabia has taken a tough stance on Iran, the only major OPEC producer to have refused to participate in the freeze. Tehran says it needs to regain market share after the lifting of international sanctions against it in January.
Deputy Crown Prince Mohammed bin Salman told Bloomberg that the kingdom would restrain its output only if all other major producers, including Iran, agreed to freeze production.
More than a dozen nations inside and outside the Organisation of the Petroleum Exporting Countries (OPEC) have officially confirmed they would attend the meeting in Doha but the role of Iran has been the key issue overhanging the talks.
"We have told some OPEC and non-OPEC members like Russia that they should accept the reality of Iran`s return to the oil market," Iran`s oil minister, Bijan Zanganeh, was quoted as saying by his ministry`s news agency SHANA on Saturday.
"If Iran freezes its oil production ... it cannot benefit from the lifting of sanctions."
Experts were trying to find an acceptable solution to the problem that had held up the talks, sources said.
A draft agreement circulating in Doha and seen by Reuters said countries` average oil production in each month should not exceed January 2016 levels. The freeze would last until October when producers shall meet again in Russia to review progress in engineering "a progressive recovery of the oil market".
Although a freeze would be a significant step for oil producers, it would have only a limited impact on global supply and the market is unlikely to rebalance before 2017, the International Energy Agency said on Thursday.