Market Overview

Doha Meeting Leads To No Deal; Oil Prices Plunge, But Recover

Doha Meeting Leads To No Deal; Oil Prices Plunge, But Recover

Crude oil initially plunged lower by more than 6 percent after Sunday's gathering of OPEC and non-OPEC members failed to reach an agreement on oil exports.

OPEC and several non-OPEC members met in Doha, Qatar to discuss a freeze in output levels to help boost crude prices. However, the meeting may have been doomed before it even started as Saudi Arabia maintained a position it will only agree to a freeze in output levels if Iran does the same.

Iran has said it wants to increase production to regain lost market share due to international economic sanctions.

Related Link: Saudi Arabia Will Halt Oil Production Increases Only If Iran Follows Suit

In fact, Iran's delegation dropped out of the Qatar meeting at the last minute and didn't attend. This may have made a no-decision outcome easier for the organization and could re-introduce a fresh round of oil over-supply concerns and fears of a plunging price for the commodity.

The next OPEC meeting is scheduled for June 2 and it's unclear if a special summit will take place sooner.

The "meeting exposed that the heightening geopolitical tension between Saudi Arabia and Iran continues to transcend into the oil market," CNBC quoted analysts at Barclays as saying. The analysts also said, "OPEC representatives' ability to save face with even a simple, vague agreement to do what they had planned to do anyway for the next couple of months."

Oil prices managed to rebound and were trading lower by around 2.5 percent ahead of Monday's U.S. equity open. The commodity also rebounded above the $40 per barrel mark.

United States Oil Fund LP (ETF) (NYSE: USO) recently traded at $9.88, down 3.6 percent in the pre-market session.


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