Analysts thought that a way could be found to allow for the Iranian increases, but Saudi Arabia’s deputy crown prince, Mohammed bin Salman, who has become the crucial power broker in the country, appears to have reduced the room to maneuver with statements making Saudi participation contingent on full compliance.
What puzzles analysts is how Saudi Arabia and other countries could have scheduled this meeting if they knew it was doomed to failure. After all, the idea was to calm the markets, not roil them.
.. The Saudis, analysts say, increasingly seem to accept that oil prices are no longer something they can control. Prince Mohammed, who has authority over the Saudi oil industry, warned that the kingdom could increase production by a million barrels per day in the coming months if it chose.
.. With low production costs, estimated at $3.50 to $5 per barrel, Saudi Arabia can compete on price with any producer. So can Russia, which can produce oil for about $4 per barrel, according to IHS.
.. For instance, he has said he plans a public listing of the national oil company, Saudi Aramco, the world’s largest oil-producing company. A public listing might require the company to pay more attention to the requirements of outside investors than to other OPEC members.
.. Russia has plenty of reason to go along with a freeze. Russia’s economy, which depends heavily on oil revenues, is in recession. The Kremlin’s desperation for higher prices is palpable, with the country committed to two wars, in Ukraine and Syria. At home, wages are being cut, bringing early signs of social unrest ahead of a parliamentary election in September.
.. Since the Soviet period, OPEC has looked on Russia as a freeloader on price-boosting production cuts: Russia benefited but never joined in, citing technical problems of closing wells bored into permafrost and high capital outlays for pipelines in Eurasia. But Russia may not have to make any sacrifice to go along with a freeze. Oil production is at a post-Soviet high and is not expected to go much higher in the short term.