The price of oil fell to a monthly low as investors are losing faith in the potential production freeze deal slated to occur in April. On April 17th major oil producing nations, including members and non-members of the Organization of the Petroleum Exporting Countries, are scheduled to meet in the Qatari capital city of Doha to discuss potentially capping their oil production rates. Meanwhile, other commodities slipped as well, yet the dollar climbed on the heels of Friday’s optimistic data being released in the United States.
The global benchmark for the price of a barrel of oil momentarily declined to a level not seen since March 4th. The price then recovered later in the day and closed the trading day at $38.85. The massive global surplus have driven oil prices down from being over $100 a barrel in mid-2014, with the price bottoming out in the end of January at levels below $30 a barrel. Yet, due to the potential of the aforementioned assembly of oil producing nations, oil rebounded in March and ascended above $40. However, recent news has surfaced leading many analysts to question how effective the oil price-stabilizing meeting will actually be.
Last week a prince from Saudi Arabia came forward and reportedly declared that the Saudi Kingdom would only agree to cap their production if other nations, mainly Iran, followed suit. Yet, Iranian officials have made it clear that they do not plan on halting their rate of supplying oil in the near future. The Oil Minister of Iran, Bijan Zanganeh, declared this weekend that his country plans to escalate both their production and export levels. He clarified his stance by saying that Iran will only increase their production until it reaches the level it was previously at, before sanctions came down due to their nuclear program. Hans van Cleef, chief energy economist at ABN Amro, shared his thoughts on how this recent news is affecting the price of oil, “Prices are coming down because of speculation Saudi Arabia will not join (the freeze deal) and that’s probably what we’ll see over the next three weeks – more speculation and more verbal intervention.”