Lack of agreement between producers at Doha sends oil futures sharply lower

The world's largest crude oil producers failed to reach an agreement to freeze their levels of production at January's levels, as Saudi Arabia insisted that Iran - who was absent from the talks - needed to contribute to any deal.

After six hours of negotiations in Doha, Qatari energy minister Saleh al-Sada said consultations among the countries present would continue until the next meeting of the Organisation for Petroleum Exporting Countries, in June.

"All participating countries will consult among themselves and with others," Al-Sada said, according to Al-Jazeera.

However, according to Russia's energy minister, Alexander Novak, it was an eleventh hour change of mind by some Gulf producers that resulted in no agreement being reached, reports said.

News of the lack of an agreement weighed on oil futures at the start of the week.

As of 07:21BST front month Brent crude futures were lower by 4.384% to $41.29 per barrel on the ICE and those for West Texas Intermediate by another 4.9% to 38.48.

In parallel, the Footsie was being called to start the session 58 points off from the previous Friday's close.

Foreign exchange markets also experience a bout volatility in the aftermath of the decision, with the US dollar leaping 1.25% against the likes of the Canadian dollar to 1.2982, while dollar/yen was 0.78% lower at 107.94.

Similarly, other oil producing countries' currencies were also lower, with the US dollar jumping by 3.27% to 68.66 against the Russian ruble. The greenback was also appreciating 1.41% to 3.53 against Brazil's real despite news that president Dilma Rousseff might be headed for the exits in a little over a fortnight following an impeachment vote.

Diplomats and officials told Al-Jazeera that Iran's decision unwillingness to abide by any agreement had proven to be the main sticking point.

"The inability of the other oil producers to even agree on a loose commitment to freeze output for now says a lot I think. With this now seemingly off the table, at least until the next OPEC meeting in June and probably beyond, I struggle to see what could continue to support oil prices at this levels, even taking into consideration the considerable sell-off overnight.

"Declining US production may help support prices to an extent but when you factor in Iran’s intention to return to pre-sanction levels, this more than offsets any reduction," Craig Erlam, Senior Market Analyst at Oanda said in a note sent to clients.

"Since we had not factored in any significant effect from a production freeze accord in our recent oil price forecast, the failed Doha talks do not alter our outlook for the oil price. We still look for the price of Brent crude to average $46/bl in Q4 16 and $52/bl in 2017 on the back of a lower USD, stronger global economic activity and a decline in non-OPEC oil output," Jans Naervig Pedersen, Senior Analyst at Danske Bank, said in a note sent to clients.