Oil price drops as Opec fails to reach consensus

The North Sea has been hit as Saudi Arabia refuses to reduce production
The North Sea has been hit as Saudi Arabia refuses to reduce production

Oil prices have fallen sharply after members of the Opec cartel failed to reach an agreement on how to to tackle the global supply glut.

The price of Brent crude dropped 1.3% or 63 cents to US$49.09 a barrel, after ministers ended the meeting in Vienna without an output policy and remained at odds over the best way to stabilise the market.

But in a statement, Opec said both members and non-Opec producers needed to work together to bring market stability.

It added that member countries “confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers”.

The statement said: “The conference stressed that, given the current market conditions, the secretariat should continue to closely monitor developments in the coming months, and if necessary recommend to member countries to meet again and suggest further measures according to prevailing market conditions.”

The oil price has climbed by nearly 80% from lows of $28 a barrel seen in the middle of January, but still remains well short of the $115 peak of June 2014.

Brent crude broke through the $50 mark last Thursday, after US government figures showed a larger-than-expected drop in fuel stockpiles, while supply was also disrupted following fires in Canada.

Since 2014, Saudi Arabia has flooded the market in a bid to keep oil prices lower and force some higher cost producers out of business.

But Saudi Arabia’s new energy minister Khalid Al-Falih has moved to assuage concerns that it will up production after failing to agree an output strategy at the meeting.