Oil prices fall after Opec freeze deal is thrown into doubt

Jessica Morris
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Oil producers are meeting in Doha on 17 April (Source: Getty)

Oil prices edged lower today, after comments from Saudi Arabia threw the widely anticipated freeze deal into doubt.

Brent crude, the global benchmark, fell 4.2 per cent to $38.6 per barrel this afternoon.

Meanwhile, West Texas Intermediate crude, the US benchmark, tumbled 3.9 per cent to $36.86 per barrel.

Read more: How the oil price rout will affect Saudi Arabia's economy

It also came under pressure from the stronger dollar which makes buying greenback-denominated oil using a foreign currency less attractive.

Mohammed Bin Salman, Saudi Arabia's deputy crown prince, told Bloomberg News that it won't freeze oil production without participation from Opec rebel Iran.

"If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door," he said.

It will add to analysts' scepticism whether the freeze deal would be able to address the chronic supply glut in the world's oil markets.

"Hopes have been running high about the potential bullish impact of the planned Opec/non-Opec production freeze but it is hard to see how sticking to the January output level would be supportive for oil prices. There will be no re-balancing this year," PVM Oil Associates analyst Tamas Varga said.

Read more: Oil company forecasts aren't in line with reality

The deal, which already includes Venezuela and Qatar, was widely expected to be finalised at a meeting in Doha on 17 April.

While Opec rebel Iran will attend the meeting, it intends to continue ramping up oil production until it returns to pre-sanction levels.

Saudi Arabia, Qatar, Russia and Venezuela agreed in February to hold output at January levels if other countries join.

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