The Doha meeting that took place on Sunday between 16 oil producing countries ended without an accord on oil production freeze. The ineffectiveness in reaching an agreement between non-OPEC and OPEC producers threatens to set off another sharp decline in oil price. Since the lows of January 2016, oil prices rose about 60%, partially due to anticipation that the oil freeze attempt by certain oil producers globally will go well and partially because of a sharp decline in US shale production in 2016.

The failure to come to an agreement in the Doha meeting is a major disappointment for the oil industry that has been under tremendous pressure to lower costs and alter business models to boost profitability in the lower price era. Oil producing nations, particularly Ecuador and Venezuela have been deeply impacted by the oil price collapse.

The discussion amongst the nations during the Doha meeting seemed fine; however, it faltered after Saudi Arabia said Iran should sign the agreement. Certain weeks ago, Saudi Arabia hinted that it can go ahead with a freeze in production even without Iran signing the agreement, but the deputy crown prince stated last week that Saud Arabia will not agree to production freeze without Iran. The countries are likely to meet again in June 2016.

Saudi Arabia seems totally unwilling to give up its market share strategy that was introduced during OPEC’s meeting in November 2014. Meanwhile, Iran is not ready to co-operate and is unwilling to sign any agreement to limit production before its output reaches pre-sanction levels. This might trigger another set of price wars amongst Saudi Arabia, Russia, Iraq and Iran due to strong competition to boost market share, noted Nordea Bank.

“We will thus not change our oil price forecast for Q2 at USD 39/barrel before we see in fully how the market will react to no-deal news”, said Nordea Bank.