Baku, Azerbaijan, April 18
By Aygun Badalova - Trend:
The results of the past meeting in Doha is not disappointing, but only shows that the oil market is also geopolitics, Cyril Widdershoven, Middle East geopolitical specialist and energy analyst, partner at Dutch risk consultancy VEROCY and SVP MEA-Risk believes.
"The continuation of the Saudi Arabia-Iran conflict, or even possible heating up, has been playing a major part. Both parties are now calling the bluff of the other. Iran needs to show to the market that it can deliver, which a growing amount of analysts currently doubts, myself included," Widdershoven told Trend on April 18.
At same time, he said, Saudi Arabia's Deputy Crown Mohamed Bin Salman is taking to hardline approach, which is "you either comply to Riyadh, or you will be confronted by new additional oil volumes from Saudi Arabia".
The latter, based on analysis will not be as easy as maybe most will expect, as infrastructure and export options are not yet fully there, but still Saudi Arabia's overall system could increase production for short term, according to Widdershoven.
He noted that Bin Salman also wants to force Iran into the overall fold of OPEC.
"If this is not going to happen, Iraq and Venezuela will also be taking Iran's point of view," Widdershoven said.
Oil producers on Sunday failed to reach a deal to freeze oil output. The talks collapsed after Saudi Arabia surprised the group by reasserting a demand that Iran also agree to cap its oil production.
Iran was not represented at the meeting.
Earlier Iran's Oil Minister Bijan Zanganeh said that the country didn't contribute to the imbalance on the oil market, thus would not freeze its output.
Overall, Widdershoven believes that the market, especially the financial markets, has shown a lack of rationality again following the meeting in Doha.
When looking at the markets, financial analysts and hedgefunds are over reacting, he said.
"At present, nothing has changed, but prices decreased by more than 6 percent. The latter is profit-taking of investors and overreacting of the others. Market fundamentals are the same, and the old parties (Saudi-GCC-Russia) did not indicate that they will not keep to their old agreement of a partial freeze," Widdershoven said.
"While at the same time, production elsewhere is down, and demand is up. Seems that emotions have been calling the shots at present, in politics, OPEC-Iran and financials," he added.
Oil prices slid on Monday after key producers failed to negotiate a curb on their output, fueling concerns that this could hit the recent recovery in the crude market, the Wall Street Journal reported.
Brent crude, the global oil benchmark, fell 2.5 percent to $42.01 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 3.2 percent at $39.05 a barrel.