Saudi Arabia previously said it would join a production freeze deal if Iran agreed to curb output. However, Tehran has maintained that it should be allowed to raise production to previous levels before the introduction of Western sanctions over Iran’s nuclear program, instead arguing for individual-country production quotas.
Consequently, market observers believe that the failure of a deal reflects political differences that are undermining the organization, notably between the Sunni-led kingdom and the Shi’ite Islamic Republic.
“It is bearish short-term for oil prices. But what is also important is that Saudis are not planning to flood the market,” Gary Ross, founder of PIRA consultancy, told Reuters.
Nevertheless, fundamentals are improving in the energy market. For example, U.S., India and other major consumers are seeing increased demand, the Wall Street Journal reports. On the supply side, U.S. shale production has fallen off in response to the collapsed prices, and producers like Nigeria and Canada have experienced disruptions.
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United States Oil Fund