After a fierce run of chaotic headlines leading up to the Doha meeting, where speculation of deal or no-deal was enough to make blood shoot out of your eyes, the results of the meeting are finally in.
As we learned earlier in the day, despite a leaked draft 24 hours earlier stating that there was in fact at least a gentlemen's agreement to freeze production at January levels, the talks broke down, oil futures crashed and crushed those who got long into the weekend, and all participants left the 12 hour session without agreeing on anything except that there is still a lot of work to be done if a deal is ever going to be reached.
Aside from setting up a lot of hedge funds for a bloody Monday morning, the breakdown in talks clearly frustrated Russia, who came out and blamed OPEC states for presenting demands on the morning of the talks in Doha and "undoing months of negotiations."
As Russia Today reports, Russian Energy Minister Alexander Novak spoke to Russian media following the conclusion of the talks, and it was evident he was very frustrated. Mr. Novak explained that the 11 OPEC states and seven outsiders present during the meeting had spent two months drafting an agreement that would cap oil production at January levels in an effort to stabilize oil prices, and it was all undone by the fact that Saudi Arabia, Qatar, UAE, and "predominantly other Gulf States" insisted that Iran be included in the deal (Iran did not attend the talks). The official was quoted as saying the following about the situation: Related: Will China's Slowing Economy Stall The Silk Road Project?
"Some OPEC countries decided to change their terms at the last moment, trying to get concessions from countries that are not here. We were insisting on trying to concentrate on the countries which are."
"How can Iran be the reason for the talks' failure, when it wasn't even here?"
He went on to say that Russia would be "unaffected" by the lack of a deal, but now any correction in oil prices would be delayed by about six months, with the market not recovering until mid-2017. Related: Horizontal Land Rig Count Summary 15th April 2016
We can understand the source of his frustration of course, as just a few months ago it was reported that the Russian government was slashing its expenses by roughly $9.1 billion in an effort to offset sliding oil prices. The key here is that the 2016 budget has been set modeling $50/bbl oil by year end, which as of right now is down 21 percent from that level. Russia will face significant economic pressure after the lack of a deal in Doha, and it remains to be seen how well it can handle that.
As a visual reminder of how much Russia depends on the price of oil, in 2013 54 percent of Russia's total export revenues came from oil and petroleum products.
(Click to enlarge)
More Top Reads From Oilprice.com:
- Half Of Kuwaiti Oil Production Offline After Massive Strike
- Saudi Arabia Kills Doha Deal, Talks Fall Apart
- Canada’s Oil Industry To See 62% Decline In Investment