Crude prices failed to move up from $ 50 from the impact of OPEC’s failure to induce a production cut. The Brent crude was trading at $49 per barrel down by 1.3% after the impact of the OPEC decision. This is a downturn in prices after the commodity has achieved rise during the last few weeks.
The new development has given considerable relief to leading crude importers like India. Return of crude to above $50 would have opened the previous painful import bill burden for many import dependent countries.
The OPEC meeting was dominated by a tussle between Saudi Arabia and Iran with the former insisting all members to cut production. But Iran was reluctant to do so. OPEC’s two political rival had contrasting views about production and price strategies. Besides, non OPEC serious producers like Russia are also disjoint with Saudi efforts.
Over the last two years, OPEC has is losing control over the market due to increasing share in production by non-members like the US and Russia. The re-induction of Iran as an active producer in the crude market with the elimination of the Wes sponsored ban has also made crude an oversupplied product in the market.
Iran is now a major player with Tehran selling heavily to consumption heavyweight India. Exports from Iran to India recorded spectacular growth at the expense of Saudi in recent months. Indian private sector firms are getting heavy cargo from Iran and this has given Tehran more bargaining power at the OPEC.