Saudi Arabia stands by its tough talk with no involvement from Iran

Oil producers were unable to agree on a deal in Doha that could've seen the production of the commodity frozen for a set period in an effort to lift prices that have traded near 12 year lows. The oil summit was called after Saudi Arabia along with Russia, Qatar and Venezuela proposed to freeze their production on condition that other producers including that of Non-Opec nations, did the same. This prerequisite came from the insistence of Saudi Arabia who's been at loggerheads with neighbours Iran who refuse to follow such a plan.

In an interview with Bloomberg last week, deputy crown prince of Saudi Arabia, Mohammed bin Salman Al Saud stated that the country wasn't willing to strike a deal without the involvement of Iran and should a deal not be agreed too the oil rich kingdom could immediately raise production to over 11.5 million barrels per day which would add even MORE supply to an oversupplied market.

As much spin as Tehran tries to put on the reasoning for their absence no doubt has been left that the real intention behind the nonattendance was to test Riyadh's threats of turning its back on a deal should their conditions not be met which is now clearly known.

But as much as Saudi has stood by what its said it does also paint a grim scenario for the price of Black Gold should they move ahead with plans to expand production aimed at crippling other producers and stamping their authority on the dominance of oil supply. Mohammed bin Salman was in an retortive mood when he hinted that his nation could increase production too as much as 20 million barrels per day if it invested considerable capital into the oil industry.

Oil slips on failed Doha deal https://t.co/5W9iV5c1ir pic.twitter.com/xmOxvgSJot

— RT (@RT_com) April 18, 2016

One thing is for certain and that is Saudi Arabia may have become alarmed by the emerging trend of bleeding foreign reserves to cushion the blow from lower oil prices however their stash hasn't been so badly affected that it causes those in charge to lie awake at night just thinking about it.

Iran is at a distinct disadvantage here while only having just been released from the shackles of sanctions from the international community. They'd need to see a higher oil price to benefit properly from the sale of their produce to be certain of repairing the economic damage caused through the years of non-inclusion in world trade.

But Saudi Arabia could suffer much more over the long term by making their allies believe that their interest in OPEC lies not in the common good of all members but rather on their own self-centred needs. In protecting their market share, Riyadh is showing the world that it's not willing to compromise its own dominance while asking others to do so with dire consequences attached to the lack of following instructions.

In the age of globalisation, world trade has grown stronger and ties between nation don't only depend on economic coordination as had been the case for many years. Money talks and so it walks when the deal no longer makes sense for both parties. Saudi's bullyboy tactics might stab at the short term benefits that could've been captured if Iran's detachment from the deal was overlook but the longer term implication hold a shaky ground for those who now see Saudi's dictatorial rule over OPEC as oppressive to economic prosperity.    

This chart shows that #Opec’s days as econ force are over. Group is unable to reverse current slump in crude prices. pic.twitter.com/9iDCYuU82d

— Holger Zschaepitz (@Schuldensuehner) April 18, 2016