Right decision: Iran refuses to attend Doha summit
Energy expert Mahmoud Khagani's exclusive article for Trend
Iran's Oil Minister Bijan Zanganeh made a right decision not participating in oil-producing & exporter countries which met in Qatar to outline how they are able to commit themselves to a possible freeze of production to prevent further decline in oil prices.
I personally would have been surprised in case Iran would have participated the meeting at minister level as it is a logical observation that freezing the current production is meaningless as the major producers involved in the meeting are producing at the up limit of their production capacity while there is peak demand for oil in the consuming nations.
So, the meeting in Doha seems to have been planned by OPEC major producers and exporters to confirm the fact that OPEC is dead long live OPEC. Perhaps that is the reason as reported by the news media the attendees, including Saudi Oil Minister Ali al-Naimi, silently swept past gathered journalists at a luxury hotel in Doha ahead of the meeting.
Qatar's energy and industry minister, Mohammed bin Saleh al-Sada, has said that 15 oil-producing nations representing about 73 percent of world output are expected to attend the Doha meeting, but he has not said whether this gathering will create a real oil cartel ?
Global oil markets have changed particularly during the past two years. Oil prices crashed to as low as $26 per barrel in February, from well over $100 in 2014.
International Oil Companies (IOCs) & National Oil Companies (NOCs) have had no option other than to cut billions of dollars in spending and investment programs. This has caused thousands in the industry to lose their jobs and forced many contractors to declare bankruptcy.
In the meantime, the Saudi Arabia government's brutal message for high-cost petroleum producers & exporters such as Economic Cooperation Organization (ECO)-Caspian region is: "...Get out of Markets..."
Many analysts like Chris Cook a Senior Research Fellow at University College London are of the view that unless there will be a drastic cut by Saudis low oil prices will continue through this year and into the 2017.
On the other hand the decline of oil price is good news for consumers, and US politicians for the sake of current presidential campaign. Drivers in the United States now pay $2.05 a gallon (54 cents a liter) on average. This price is almost near the price that we pay here in Iran. I am told by a Turkish Airline staff that the Airlines also have enjoyed savings of billions of dollars in jet fuel costs. But, apart from Iran which is used to austerities because of sanctions, the low oil prices have pressed ECO-Caspian Sea & Persian Gulf -OPEC - states dramatically.
In my view the Doha meeting is designed for Saudis and its allies to show that they are still matter in the oil market. But, I and many other analysts believe that Saudis no longer have any role to play as swing producer at high oil prices and this role is now transferred to USA. In fact Saudis have now been fallen in the trap they designed with their allies for imposing sanctions on Iran petroleum/energy industry. The question is how long OPEC major producers in particular Saudis can stand current low oil prices before their economic shortcomings destroy their political system?
I am of the opinion that those producers selling their oil should change their policy and learn from Iran which supplies its oil. That means Iran has now entered a new era of considering energy as a service not as a commodity. Therefore, the Doha meeting without Iran participating in many observers view will not provide a reliable outcome.
ECO -Caspian Energy Accord:
For the ECO-Caspian region observers agree that a prototype aimed at initiating a new ECO- Caspian energy framework and market instrument in the course of the 4th ECO Energy/Petroleum Ministerial Meeting during 2016 may be included on the agenda and has the potential if accepted, to open up new avenues for resolving many of the most intractable current economic and investment issues.