The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Sumit Kumar, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
A deal to freeze oil output by OPEC and non-OPEC producers fell apart on Sunday after Saudi Arabia demanded that Iran join in despite calls on Riyadh to save the agreement and help prop up crude prices. The development will revive oil industry fears that major producers are embarking again on a battle for market share, especially after Riyadh threatened to raise output steeply if no freeze deal were reached. Iran is also pledging to increase production following the lifting of Western sanctions in January, making a compromise with Riyadh almost impossible as the two fight proxy wars in Yemen and Syria.
Some 18 oil nations, including non-OPEC Russia, gathered in the Qatari capital of Doha for what was expected to stabilize output at January levels until October 2016.But OPEC’s leader Saudi Arabia wanted all members of the Organization of the Petroleum Exporting Countries to take part in the freeze, including Iran, which was absent from the talks. Iran had refused to stabilize production, seeking to regain market share post-sanctions. The Russian side was disappointed by the failure of talks as Russian economy is suffers from sanctions from west and oil price boost could have had helped it economy to boom. But a failure to freeze oil production could help developing countries like India as this saves forex for the country.