Tuesday, April 19, 2016

The global oil deal that never came to be

From @Reuters -- It was supposed to be the easiest deal ever reached among key oil market players, a mere formality.

Eighteen countries were gathering in the Qatari capital of Doha to rubber-stamp the first joint agreement between major OPEC and non-OPEC nations in 15 years, tackling a huge global glut after flooding the market for two years.

The text was agreed and the timeframe was clear. Oil prices were rising. Traders were calling the event boring.

Then, clouds began to appear.

Thousands of kilometers away from Doha, at a summit in Istanbul, Saudi King Salman bin Abdulaziz and Iranian President Hassan Rouhani gave each other the cold shoulder in front of cameras after the group accused Iran of supporting terrorism.

The frosty tone was noted and became a talking point among some delegates and OPEC watchers in Doha.

None of the OPEC and oil industry sources linked the subsequent collapse of the oil meeting in Doha to the events in Istanbul, but said it was indicative of the deep mistrust between the Sunni Muslim kingdom and the Shi'ite Islamic republic, which compete for influence in the Middle East and are currently fighting proxy wars in Syria and Yemen.

From Friday onwards, things went downhill.

Only a few days before the Sunday meeting, Saudi Arabia surprised Qatar by demanding that it cancel Iran's invitation to the talks, arguing that only those countries which were ready to freeze output should attend.

Iran has long said it wanted to regain market share following the lifting of sanctions in January and assumed that Venezuela and Russia - the two proponents of the freeze deal - had managed to persuade the Saudis the plan was worth signing even without Tehran's involvement.

The sources said the Saudis told Qatar that if Iran showed up at the meeting without agreeing to the output freeze, there could be no deal.

Qatar's Emir, Sheikh Tamim bin Hamad al-Thani, was a main proponent of the deal, and even made a January visit to Moscow specifically aimed at talking about the idea with Russian President Vladimir Putin.


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