Oil slid Monday after weekend talks in Doha between the world’s biggest producers ended without an agreement to limit supplies.
West Texas Intermediate crude fell 58 cents to settle at $39.78 a barrel on the New York Mercantile Exchange, after plunging earlier nearly 7 percent below $38. Declines eased as a labor strike in Kuwait, OPEC fourth-biggest member, cut output for a second day.
The summit in the Qatari capital, which dragged on for more than 10 hours beyond its scheduled conclusion, finished with no final accord.
“We have two compelling, competing stories in the market,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “There’s the failure to reach an agreement in Doha, which supports an OPEC in disarray narrative, and we have an oil workers strike in Kuwait that’s taking a significant amount of supply off the market.”
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Oil had rebounded in recent weeks amid speculation that a deal would be reached in Doha as U.S. production fell. Oil ministers from 16 nations, representing about half the world’s output, gathered in a bid to stabilize the global market, the first significant attempt at coordinating oil output between the Organization of Petroleum Exporting Countries and nations outside the group in 15 years.
Discussions broke down after Saudi Arabia and other Gulf countries rejected any deal unless all OPEC members joined including Iran, which wasn’t present at the meeting, Russian Energy Minister Alexander Novak said.
“Given the expectations ahead of Doha, the failure to reach a freeze agreement is likely to cause an oil market selloff,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University. “The fact that Saudi Arabia seems to have blocked the deal is an indicator of how much its oil policy is being driven by the ongoing geopolitical conflict with Iran.”
Iran, which is reviving oil exports after international sanctions were lifted in January, ruled out any limits on its output before reaching pre-sanctions levels, dismissing the notion of joining the freeze as “ridiculous.”
OPEC members will consult among themselves and with other oil producers, Qatar’s Energy Minister Mohammed Al Sada said at a news conference after the meeting. The next scheduled bi-annual OPEC meeting is on June 2.
“They failed to even agree to a bland, vague statement,” said Michael D. Cohen, an analyst at Barclays in New York. “Doha was a distraction from the fundamental market rebalancing that was already taking place.”