Oil prices slid on Monday after a meeting between major producing nations on a proposed output freeze fell apart, leaving the world grappling with an excess of unwanted crude.
Brent crude futures fell almost 7% in early trading on Monday before bouncing back to $41.70 per barrel, down 3.35% since their last settlement. Benchmark US crude futures were down by 3.62% at $38.90 a barrel after falling as low as $37.61 earlier in the day, Reuters reported.
Traders said an oil worker strike in Kuwait that cut the country’s crude output by some 60% prevented Brent from tumbling below $40 per barrel. A cut in US drilling down to 2009 levels had prevented steeper falls there.
Oil exporting nations, including non-OPEC Russia, had gathered in the Qatari capital of Doha for what was expected to be the rubber-stamping of a deal to stabilize output at January levels until October.
But the deal crumbled when OPEC’s top producer Saudi Arabia demanded that Iran join in despite its repeated assertions it would not do so until it had reached pre-sanctions levels of output.
“Saudi Arabia intentionally torpedoed the agreement and was willing to accept its failure. This has severely damaged the credibility of oil producers in general and of OPEC in particular,” Commerzbank said in a note.
