NEW YORK: Oil prices tumbled Friday as Saudi Arabia knocked down already low expectations that major producers would agree to limit output to tackle a global oversupply.
US benchmark West Texas Intermediate for delivery in May slid $1.55 (4.0 percent) to $36.79 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for June delivery, the global benchmark, finished at $38.67 a barrel in London, down $1.66 (4.1 percent).
Saudi Arabia’s deputy crown prince, Mohammed bin Salman, said that the kingdom should freeze its oil output only if mirrored by Iran and other major oil producers, Bloomberg News reported Friday.
“If all countries agree to freeze production, we’re ready,” he said in an interview.
“The suggestion that Saudi Arabia will not freeze oil production if Iran doesn’t do the same, coupled with a stronger dollar, has taken a sledge hammer” to prices, said Jasper Lawler, an analyst at traders CMC Markets.
Major oil producers led by Saudi Arabia and Russia will meet in Doha later this month to discuss measures to stabilize prices, including a proposal to cap production.
“The premise of the April 17 summit in Doha was shaky enough to begin with, but the apparent Saudi stance makes us wonder whether the meeting will take place at all, since we don’t see Iran foregoing a further recovery in its own output,” said Tim Evans of Citi Futures.
Oil prices are being hit in part owing to the return of Iranian crude to world markets after years of economic sanctions on Tehran were lifted following a nuclear deal last year.
Shailaja Nair, senior managing editor at global energy information provider Platts, said “unchanged fundamentals” of supply and demand remain a key influence on market sentiment.
“The market is still oversupplied with crude, demand is still the same, we’re not seeing any rise in demand. Nor is there any possibility of any rise in demand in the near term,” she said.
Nair said only a decision to cut production rather than an output freeze would boost prices.
“Considering the amount of crude already in the market, a freeze is not going to make much of a difference,” she said.