Brent crude, the global benchmark, was off more than $1 to $41.61 Monday morning, and West Texas Intermediate crude, the U.S. benchmark, fell to $38.77.
Falling prices may have been propped up somewhat by a strike in Kuwait, which has lessened global production and thus, tightened the gap between supply and demand — at least temporarily.
The weekend meeting in Doha, Qatar, had been closely watched because it could have introduced an element of coordination among most OPEC countries and Russia, the world’s second largest oil producer at the moment, and thus resulted in at least some limits to how much oil makes its way onto the market. A global oversupply of oil has driven prices down steeply since 2014.
Instead, however, Saudi Arabia pushed to include Iran in any freeze agreement. But Iran, emerging from international sanctions, has been rushing to ramp up its oil production and did not attend the Doha event.
The general analysis has been that the failure of Doha talks means the potential for further drops in oil prices, which had risen into the $40 range in 2016 from a low below $28 for Brent in January.
“If agreeing to a freeze of output among producers whose output is close to capacity is proving this difficult, then this exercise shows to the market that achieving a cut, should there be a need for one in the future, will be almost a non-starter,” Barclay’s said in a note to investors late Sunday. The firm said the result in Doha “could result in a sharp price fall in the short term, as positioning in the market adjusts to the new reality,” although the strike in Kuwait could also strengthen prices if sustained.
“We believe that the weekend headlines will further support the already high level of price volatility,” added Goldman Sachs in a research note.
However, in the longer term, the International Energy Agency has recently forecast that supply and demand could come back into better balance by the end of 2016.
The next meeting of OPEC members is scheduled for June in Vienna.