April 18, 2016 8:21 pm
HONG
KONG: Oil prices plunged in Asia Monday, sending energy firms and regional
stock markets tumbling after the collapse of talks among the world’s top oil
producers intended to ease a global supply glut.
Hopes that the talks
in Doha on Sunday would result in an output cap helped the black gold climb to
2016 highs last week, having approached 13-year lows just months ago.
However, Saudi
Arabia’s decision to walk away after Iran refused to take part sent shockwaves
through trading floors, fuelling fears of another rout in the commodity and
world markets.
After six hours of
negotiations, the 18 producers concluded that they needed “more time” to reach
an agreement, said Qatari Energy Minister Mohammed bin Saleh al-Sada.
US benchmark West Texas
Intermediate for May delivery was down 4.7 percent, or $1.91, at $38.45. And
global benchmark Brent crude for June lost 4.4 percent, or $1.89, to $41.21.
Energy firms were the
biggest losers Monday, with Sydney-listed mining giant BHP Billiton down three
percent, Rio Tinto off 1.6 percent and Woodside Petroleum 1.4 percent off.
In Hong Kong China’s
CNOOC lost more than three percent and PetroChina was off two percent. Inpex in
Tokyo was three percent lower.
While key producer
Iran had said it was unwilling to freeze output—having just resumed exports
after years of Western sanctions —there had been hopes that all other majors at
the talks would hammer out a deal.
‘Spanner in the works’
However, analysts said Riyadh’s need to maintain its market share prevented it from going along with other participants at the meeting including Russia, Kuwait and Qatar.
However, analysts said Riyadh’s need to maintain its market share prevented it from going along with other participants at the meeting including Russia, Kuwait and Qatar.
“Despite many of the
18 oil producers believing the meeting in Doha was merely a rubber-stamp affair
for an oil production freeze, Saudi Arabia managed to throw a spanner in the
works,” said Angus Nicholson, an analyst at IG Markets.
He said dealers had
been “heavily positioned for a deal to go through.”
Regional stock
markets, which rallied last week on upbeat economic data out of China, turned
negative.
Sanjeev Gupta, an oil
and gas analyst at EY, told AFP the failure “revived price collapse fears,
especially after Saudi Arabia hardened its stance and threatened to raise
production quickly if no freeze deals were reached”.
And Peter Lee, an oil
and gas analyst BMI Research, warned oil prices could fall 15
percent.
percent.
Tokyo’s Nikkei closed
3.4 percent lower, with earthquake worries also hitting sentiment.
Toyota, Sony and Honda each lost at least four percent as their production lines on Japan’s southwestern island of Kyushu remained offline due to the quake.
Toyota, Sony and Honda each lost at least four percent as their production lines on Japan’s southwestern island of Kyushu remained offline due to the quake.
However, analysts
said the impact on automakers’ bottom lines should be relatively limited owing
to lessons learned after the 2011 quake-tsunami disaster, even if operations
were shuttered for several weeks.
Hong Kong was 1.4
percent lower in late afternoon, Shanghai ended down 1.4 percent and Sydney
slipped 0.4 percent. Seoul sank 0.3 percent while Singapore was down 0.7
percent. AFP
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