Asia energy firms sink with oil as Doha output talks fail

[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 per cent, or US$1.91, at US$38.45. And global benchmark Brent crude for June lost 4.4 per cent, or US$1.89, to US$41.21.

Energy firms were the biggest losers Monday, with Sydney-listed mining giant BHP Billiton down three per cent, Rio Tinto off 1.6 per cent and Woodside Petroleum 1.4 per cent off.

In Hong Kong China's CNOOC lost more than three per cent and PetroChina was off two per cent. Inpex in Tokyo was three per cent 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.

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 per cent.

Tokyo's Nikkei closed 3.4 per cent lower, with earthquake worries also hitting sentiment.

Toyota, Sony and Honda each lost at least four per cent 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 per cent lower in late afternoon, Shanghai ended down 1.4 per cent and Sydney slipped 0.4 per cent. Seoul sank 0.3 per cent while Singapore was down 0.7 per cent.

The news led to a rush for safe investments, with the yen rallying against the dollar. Emerging-market currencies were also hit.

The oil-dependent Malaysian ringgit was one per cent down against the dollar while Australia's dollar - which also relies on commodity sales - shed 0.8 per cent. South Korea's won, the Indonesian rupiah and Thai baht were all sharply lower.

REUTERS