Here’s the biggest unknown for oil’s most important meeting in decades

Photo: Win McNamee/ Getty Images.

Major oil players will be gatheringto discuss a potential production freeze on Sunday, April 17, in Doha, Qatar, in what some analysts have called “the most important meeting of the last three decades.”

And ahead of the event, analysts at Citi highlighted the one, big mystery going into the meeting:

“The main unknown going into Sunday is what Saudi Arabia’s position will be,” a Citi Research team led by Edward L. Morse wrote in a note to clients.

“The world’s largest petroleum exporter has been silent about whether it attends and what position it stakes out,” they added.

Citi’s team points out that there were two major public comments from the Saudis over the last two months:

  1. Back in February at the CERA conference in Houston, oil minister Ali Al-Naimi said the Saudis would always fulfil its customers’ needs. He also remarked that there was “less trust” between the big oil powers, according to Forbes.
  2. And two weeks ago, the Deputy Crown Prince Mohammed bin Salman told Bloomberg that the Kingdom would only participate in a price freeze if and only if Iran and other suppliers do, too.

For what it’s worth, however, Iran’s oil ministry just announced that its Oil Minister Bijan Zanganeh will skip the meeting in Doha, and reiterated that “Iran already announced it cannot join the plan to stabilise oil prices,” as its output is still below pre-sanction levels.

Notably, oil-watchers aren’t feeling too optimistic ahead of the meeting’s outcome.

“As it stands now, we believe that the most likely outcome is that producers fail to close the deal and announce a freeze on Sunday, but that they instead pledge to continue to conversation and even possibly put an additional OPEC/non-OPEC meeting on the calendar for later in the year,” Helima Croft, the head of commodities research at RBC Capital Markets, wrote in a note to clients.

“Saudi Arabia and Iran do not appear ready to give sufficient ground to get a comprehensive freeze agreement done by Sunday, given current information,” she explained. “In order to get a breakthrough, we would likely need to see Saudi Arabia move beyond an outright insistence that Iran freeze production at current levels and/or for Iran to agree to a production ceiling that falls well short of their current 4 mb/d negotiating stance.”

The Citi team also voiced deflated thoughts on the meeting’s outcome.

“Sunday’s producer meeting is all about nothing no matter what agreement might be forged,” they wrote in the note.

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