After the international community learned that the recent oil summit in Qatar had ended up with no results, the oil market in London showed a sharp decline over the first couple of minutes. To be more specific, Brent oil lost 7% of its value at a time, thereby seeing its price go down to $40,16/b. Still, there was no further downtrend. The price recovered a little bit and reached $40,71 a few hours later. As for WTI oil, the price also dropped by approximately the same amount of percent points.
Just a few hours before the price crash, some OPEC members and other oil exporters failed to agree on freezing their oil production quotas at the level seen in early January 2016. The international community closely watched the event and was looking forward to its results. The thing is that the price could have moved in the opposite direction to a great extent, if hey had agreed on the issue. For now, international observers say that Iran became one of the key reasons why the summit failed to end up with the expected results.
The thing is that Iran refused to participated in the oil summit and completely rejected the idea to cap its oil production because Iran is trying to catch up with the lost years under Western sanctions. As you know, Iran returned to the international market of crude oil only in January 2016 and has been actively producing crude oil and increasing its oil exports to Europe and other outlets. With that being said, Iran is still busy restoring the production level that used to be prior to the sanctions.
At the same time, Russian Minister of Energy Alexander Novak said that most of the participants changed their mind right before the summit. They demanded cooperation from other major oil exporters outside of OPEC. He is sure that the failed summit is not going to deteriorate the situation in the Russian economy in general and the Russian energy sector in particular. Still, Russia is willing to participate in another oil summit planed for July 2016. Still, this time Russia is not going to be as optimistic about the summit as it used to be.
Experts say that even though the failed summit may well trigger another downtrend in the market of crude oil, it is going to be a short-term move. They say that the market is going to stabilize by the end of the trading week somewhere between $40-$43 per barrel.
