OREANDA-NEWS. A meeting of 18 Opec and non-Opec producers in Doha has failed to achieve the modest ambition of a freeze on production at January levels.

Ministers went into yesterday's meeting with a draft proposal in hand but the gathering broke up in disarray after several hours.

The failure of the meeting to agree a deal had an immediate effect on oil markets, with crude futures falling by around 4pc in after-hours trading today. The Ice front-month June Brent contract was at $41.40/bl at 12:30 Singapore time (04:30 GMT), down by $1.70/bl or 4pc from the settlement on 15 April. The Nymex front-month May crude contract was at $38.51/bl, down by $1.85/bl or 4.6pc on the previous settlement price.

A non-Arab Opec delegate said the participants in the meeting had failed to agree the freeze because, from the beginning of the meeting, Saudi Arabia had insisted that Iran should join the freeze.

Speaking alone at a press conference later, Qatar's oil minister Mohammed Saleh al-Sada said: "We debated the freeze from all aspects and what it could result in, and the meeting concluded that we all need time for further consultations, and that from now until the Opec meeting in June, all participating countries will consult with each other and with other countries."

Al-Sada said yesterday's meeting discussed a mechanism for an output freeze, first agreed in principle at a February meeting in Doha that grouped Saudi Arabia, Russia, Qatar and Venezuela. Those four producers agreed at the February meeting to contact other countries within Opec and outside it to convince them to agree to freeze output as a trust-building measure that would signal the market that producers would be willing to manage supply and demand once the market is in balance.

Al-Sada said "various scenarios" for implementing a freeze were discussed at yesterday's meeting, but that the delegates "concluded we needed more time to look at other scenarios", he said.

"We did not reach an agreement today, but it is a work in progress," said Nigerian oil minister Ibe Kachikwu as he left the meeting on 17 April.

Ahead of the meeting, some non-Gulf delegates said consensus was highly likely on a draft agreement that would see the participants freezing output at January levels until 1 October, with a follow-up meeting to be held in Moscow in October to evaluate market developments.

The participants in the meeting noted that "pressure on the market is decreasing and the market is moving in the right direction", al-Sada said.

"The meeting recognised that the oil market is relatively healthier than it was in February, and we think that fundamentals of the market are generally improving," said al-Sada, who is Opec's rotating president this year. He attributed the stronger fundamentals to "an additional drop in conventional and non-conventional oil production and a huge drop in oil rigs and investment" that would be likely "to reflect on oil production worldwide".

Asked if the obstacle to an agreement had been the insistence of some delegations that all Opec producers, particularly Iran, should participate in the freeze, al-Sada said: "We respect [Iran's] position," but added, "A freeze would be more effective if major producers like Iran and others could be included, because that would accelerate a rebalancing of the market."

Iran, which wants to boost its output to a pre-sanctions level of around 4mn b/d, stayed away from the meeting but expressed its support for a freeze by other Opec and non-Opec producers.

"To Opec members and some non-Opec members such as Russia, which was in contact with us, we said that they must understand the reality of the return of Iranian oil to the market because if Iran were to hold its production at January levels, it means that nothing came of the lifting of sanctions from this country," Iranian oil minister Bijan Namdar Zanganeh said in Tehran hours before the meeting.

The non-Arab Opec country delegate said that discussions at the meeting had gone around in circles as other delegates tried to convince Saudi Arabia to support the freeze, to no avail. Kuwait and the UAE had supported the Saudi position, although Qatar refrained from doing so, he added.

Saudi Arabia's position appeared to be driven by politics, rather than by economics, and is likely to have been dictated by the foreign ministry and senior Saudi royals rather than decided by oil minister Ali Naimi, said the non-Arab Opec delegate.

Naimi has often stressed that, in his role as Saudi oil minister, he deals with oil policy as an economic issue, and that he regards Opec as a non-political body that takes decisions on purely economic grounds.

A total of 18 countries attended the Doha meeting but, by and large, they are producing at or close to capacity, so a freeze was unlikely to reduce potential supply to the market over coming months.

Last week the IEA said the impact on physical supplies of a freeze, if agreed in Doha, would be limited. And Russia's oil minister said he expected it would do no more than put a floor under crude prices and bring supply-demand rebalancing forward to the end of this year rather than the end of 2017.