Oil down as prospects for output freeze dim

RIYADH, August 26, 2016 – Oil prices suffered in the early hours of trading on Friday, as the excitement over the Thursday announcement of Iran joining the upcoming OPEC talks was overshadowed by remarks by Saudi Arabia’s minister of energy, industry and mines, Khalid al Falih.

Speaking later that day, Al Falih cautioned against too much optimism over a potential cap on oil production. “We don’t believe any significant intervention in the market is necessary other than to allow the forces of supply and demand to do the work for us,” he told Reuters. His statement sent oil down, with Brent and WTI crude trading at USD 49.55 and USD 47.26 per barrel, respectively.

Remarks on Friday by Minister of Petroleum Bijan Zanganeh, saying that Iran’s efforts in helping OPEC facilitate oil market recover were conditional on the members respecting Iran’s “right to regain its lost share of the market,” also do not bode well for the prospects of a production freeze and a recovery of global oil prices.

“Our expectation is that those turning market unstable, should assume highest and main responsibility to restore stability in the market,” the Ministry of Petroleum’s news portal, Shana, quote the minister as saying. If Al Falih’s earlier remarks are anything to go by, Zanganeh’s call is likely to fall on deaf ears. “The market is moving in the right direction,” the Saudi minister said on Thursday.

OPEC Secretary General Mohammad Sanusi Barkindo, in comments published on Friday countered Al Falih, saying that producers “must take more proactive stands in relation to production management in order to complement traditional market forces.” Speaking the Arabic-language London daily Al-Hayat, he also blasted the “approach of non-intervention,” saying it had led the markets nowhere.

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