The outcome of the Doha summit, which next Sunday will decide on whether to block crude oil production in order bring oil prices up, is far from obvious. The main difficulty of the meeting, which will bring both OPEC and non-OPEC countries together, will be to overcome tensions between Saudi Arabia and Iran. To reach an agreement, OPEC members will have to grant an exception to Iran regarding oil production: since the sanctions were lifted, Tehran has made a full return to the market and does not currently intend to give up its aim of boosting production to a level of 4 million barrels per day, the same as before the economic sanctions –, which is double the amount of current exports.
The complex conflict between Tehran and Riyadh over crude oil production
Although until a few days ago Riyadh was hinting that it could accept an agreement of this kind – therefore keeping Iran out of the joint production block – by Wednesday it had backtracked, with the Saudi oil Minister “ruling out‘ oil production cuts to help increase oil prices and insisting that conditions must be the same for all.
Meanwhile, Tehran has stuck to its position: so much so, that it is not even certain that a representative of the country will attend the Doha summit. "I will go if I have time," said Iranian oil minister, Bijan Zanganeh, before calling the negotiating proposal on the production block a "joke".
However, even more could change in the battle between the producers by Sunday. Both Kuwait and the United Arab Emirates, long-term allies of Riyadh, are pushing for an agreement between the 2 countries, in the belief that normalized relations between Saudi Arabia and Iran would help market stability. Rumors - relating to pressures on Riyadh - have also been reported by the Wall Street Journal. "We believe that a joint agreement on a positive path will help market stability," said Anas al-Saleh, the Kuwaiti oil Minister who said a month ago that, without the support of all (including Iran), "it would have pumped at maximum power, selling every single barrel produced".
Russia's role in oil prices
On this complicated chessboard of energy geopolitics, a key role is also being played by Russia, which reportedly signed an agreement with Riyadh on mining shares ahead of the Doha summit, in order to freeze or even reduce production. The Saudi oil minister, however, refused to comment on the report, saying merely "forget about this subject."
This news also contrasts with OPEC’s April monthly market report, according to which Russia actually plans to increase crude oil production by 20,000 barrels in 2016, in response to the projected activities of companies such as Novatek, Bashnet, Gazprom and Tatneft.
Oil prices start to rise again ahead of the summit
Meanwhile, ahead of the summit, oil prices have started on a slow ascent, stopping at around $40 a barrel, after hitting a record low of $27 in recent weeks. In its Global Financial Stability Report, the International Monetary Fund says that this is positive, emphasizing that the global economic situation “appears significantly improved‘, partly due to the recovery in the price of oil and other commodities. Finally, the United States will not participate in the summit.