For those of you who don't know, the recent oil summit in Doha, Qatar has failed to end up with an agreement aimed at urging major oil-exporting nations to freeze their oil production quotas at January’s levels. Instantly after the new, the oil market crashed by 7% but then recovered. Still, more experts believe that this event may have serious consequences for the entire oil markets, including another bear market, as well as the end of OPEC as we know it.
The summit last for nearly 6 hours to end up with no desired result. Saudi Arabia refused to sing the agreement until the other OPEC members do the same thing. It all started when Iran refused to participate in the oil summit and insisted on going on with boosting its oil production. With that being said, the Saudis changed their mind and started thinking like Iran, who refused to participate in the summit and cut the oil production. By doing so, Saudi Arabia shocked all the financial markets, including commodities, stocks, and even Forex. Apparently, no one likes such unpleasant surprises, especially if they come from such a major market player as Saudi Arabia. By doing so, the Saudis undermined their own image of an unofficial OPEC leader and a reliable partner.
The true reason or such a behavior are hard to reveal. Probably, the Saudi are up to something that has to do with another bearish cycle in the global market of crude oil. Maybe the Saudis made use of the summit to find out all the weak spots of their counterparts. If so, they seem to be ready to get back to their previous policies aimed at fighting for their market share and ousting rivals from the market by keeping oil prices low. That’s the only decent explanation of why the Saudis stick to higher oil production by all means despite knowing the consequences of oversupply. It seams they are willing to sacrifice today’s oil profits for the benefit of future ones. Some experts say that this policy is aimed at some vulnerable African oil nations, as well as Venezuela and Russia with its costly oil fields in the Arctic and the Siberia. On top of that, it also undermines America’s shale oil industry. With that being said, the failed summit is a blow to the oil industries of many oil nations including Russia and the USA.
Anyway, the next oil summit is probably going to take part in summer. Most likely, Russia is going to host the summit this time. With that being said, OPEC members still have time to work out a common approach to the existing problems and come up with a common solutions supported unanimously. However, some experts really doubt that this is going to be the case given the existing degree of competition in the oil market. Some of them say that OPEC is no longer a major player in the oil market. Instead, OPEC is seen as a cartel with no real power given the confrontation between its members.
