Opec set for another meeting with no deal after Doha failure

[LONDON] After failing to reach an accord on oil supply in Doha last month, Opec is poised to go another meeting with no agreement on how much crude to produce.

All but one of 27 analysts surveyed by Bloomberg said the Organization of Petroleum Exporting Countries won't set an output target on June 2, as it sticks with Saudi Arabia's strategy to squeeze out rivals including US shale drillers by pumping near-record volumes.

An accord on an output cap with non-members such as Russia collapsed in Doha last month when Saudi officials insisted Iran would need to take part.

Oil has rebounded about 80 per cent to almost US$50 a barrel from the 12-year low reached in January as depressed prices take their toll on supplies from the US to Nigeria.

The International Energy Agency and Goldman Sachs Group Inc say the crude glut is dissipating, signaling that the Saudi approach - opposed by most Opec members when it was unveiled in late 2014 - is finally paying off.

"The strategy is in the process of working - I don't think they have much incentive to particularly do anything," said Mike Wittner, head of oil market research at Societe Generale SA.

Even if they did, "the Doha talks, and the December meeting, were pretty chaotic" as political tensions between Saudi and Iran thwart cooperation.

Opec's previous ministerial meeting in December ended without any agreement on an output ceiling as the group abandoned the target of 30 million barrels a day that it had held - and mostly ignored - since late 2011.

The group's current policy, which allows members to produce as much as they choose with no need for coordination, calls the organization's basic purpose into question, said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

"The question is," Mr Weinberg said, "is Opec dead or just in a coma?"

BLOOMBERG