At best, this weekend's oil producers meeting was only expected to walk away with a sketchy deal to freeze production. Now, with Iran's last minute decision to stay home, even that modest outcome appears in jeopardy.
Early Saturday morning, Iran's oil ministry said no representative would attend the meeting in Doha, Qatar on Sunday. Meanwhile, Saudi Arabia's Deputy Crown Prince Mohammad bin Salman reiterated in a Bloomberg interview this week that the kingdom would not hold back on oil output unless other producers, including Iran, did the same.
Analysts say a freeze would do very little to change the world oil glut, but it might help producing nations buy time until the oil market stabilizes. On Saturday, sources in Doha told CNBC that expectations were building for a modest agreement that may help support oil prices and manage market expectations until June's OPEC meeting.
Oil prices have gained sharply over the past two months on high hopes that the Sunday meeting of OPEC and non-OPEC countries will result in a deal to freeze crude production at January levels. But oil analysts now say the best deal producers may agree to could be what seems more like the outlines of an eventual deal.
"There's a lot of rhetoric, a lot of statements around the oil market, but the fundamental thing you have to look at is money. It's revenues, and the revenues of these countries that export oil have really collapsed," said Dan Yergin, vice chairman of IHS.
That could indeed be what brought producing nations to the table.
"In 2014, OPEC revenues were about a trillion dollars. Last year, they were half a trillion dollars. This year they're on a course to be down another 20 percent," said Yergin. "This creates inordinate pressure on governments. Very difficult choices have to be made. Budgets have to be cut, credit ratings go down. There is a risk of social turmoil and problems. I think that is really weighing on producers, forcing them to find some way to stabilize things."
If an agreement can't be reached and oil prices fall, analysts expect the ripple effects to be felt across financial markets Monday.
"I think they're they're trying to put lip stick on this pig," said Helima Croft, head of commodities strategy at RBC Capital Markets. "They will try to make sure they don't walk away grim faced."
John Kilduff of Again Capital said he had been expecting the potential agreement to fail, and without Iran it appears that it will.
"The market share battle will rage on, now, with only the poorer OPEC countries and U.S. shale players paying the price," said Kilduff.
Edward Morse, Citigroup global head of commodities research, said last week if there were any type of accord, it would lack detail and commitment. "I think at best, it's going to be a very soft agreement," he said. Morse said the group could also announce that it has a follow-up meeting, but no binding deal is expected.
Oil prices have risen about 55 percent since Russia, Saudi Arabia, Qatar and Venezuela agreed in February to freeze output if other producers would join them. Russia's energy minister, Alexander Novak, reportedly told a closed-door briefing of energy analysts this week that a deal would be more of a framework, without specifics.
"I do not expect to see a firm agreement coming from Sunday's meeting. I think kicking it down the road to some future deal is the best we're going to get ... kicking it down the road and hoping the oil market fundamentals improve enough," said Chris Weafer, senior partner at Macro-Advisory. "When this started, the oil price had dipped below $30. They had to do something and creating optimism has worked very well, and it has had traders building long positions."
The focus in recent weeks has been on the tensions between Iran and Saudi Arabia, and those concerns picked up when bin Salman said the kingdom would not participate in a freeze unless other nations did the same.
But Iran on the other hand, has long insisted it will not abide by a production cut. Tehran is working to bring oil back on the market, now that it is no longer being sanctioned. The IEA said Iran's March output was 400,000 barrels a day higher than it was at the start of the year, and Iran has said it wants to add a total of a million barrels this year.
"It would be extremely difficult for the Saudis to say 'We're absolutely freezing this hard and fast,'" Morse said.
Bin Salman was also quoted by Bloomberg as saying if there is no freeze, Saudi Arabia would "sell at every opportunity."
Morse said Ali al-Naimi, Saudi Arabia's oil minister, made a key statement when he spoke at the CERAWeek conference in February that underscores the Saudi position. Naimi said he would support a freeze if all countries agreed but said Saudi Arabia would be ready to supply customers with whatever they want.
Yergin said Iran's domestic politics do not allow for much flexibility and it would be difficult to publicly back down from its plan to return oil to the market.
"If it was not for the tensions between Saudia Arabia and Iran, they might well have been able to work something out," said Yergin.
Barclays' head of energy commodities research, Michael Cohen, said he expects Saudi Arabia's oil officials will have a plan before they arrive in Doha. Saudi Arabia was the driver behind OPEC's 2014 decision to let the market set the price of oil, in an effort to maintain its market share and knock out high-priced producers, like U.S. shale.
"I think the likelihood is they'll have all their ducks in a row. The Saudis will all know what they're allowed to say and it will have been sanctioned all the way to the top," said Cohen last Thursday. "If the Saudis were having cold feet, this meeting would already be canceled."
The stakes are high for producers to leave Doha with the appearance of an accord, so that oil prices do not collapse again. But bin Salman, who controls the Saudi oil operations, is a relative unknown and it has been unclear how much he would dig in if Iran refuses to budge on output.
He has said the kingdom would be fine with low oil prices.
"As far as Saudi finances, they have plenty of room to tap the global credit markets and even sell a stake in portions of Aramco," said Kilduff.
Cohen said he didn't expect the meeting to fall apart and a vague statement was more likely, but the statement will be less important than the comments from producers, Cohen said.
"They have to have something so it's likely to be vague and the market has very low expectations, so our view is that given their very low expectations, it's important to keep in mind that you're getting a bunch of producers together in Doha, and if they start speaking to the press they're likely to have bullish statements about the market adjusting and their output not increasing."
From Moscow to Riyadh, no producer has gone unharmed. That also includes the U.S. shale industry, which operates based on the drivers of supply and demand, and the availability of financing, as opposed to a government dictate.
The hit from months of falling oil prices has finally shown up in U.S. production, which was under 9 million barrels a day last week for the first time since late 2014.
The International Energy Agency on Thursday said that the expected drop-off in U.S. production was beginning to accelerate, and that the oil market could get close to being balanced in the second half of the year. The IEA also said if the producing nations do agree to a freeze, the impact would be much more limited than an output cut.
The U.S. industry is also seeing stockpiles grow but it has now begun refinery maintenance season, typically a period of lower oil demand as refineries get ready to switch to summer gasoline production. It is also called the shoulder season.
West Texas Intermediate futures settled down 2.8 percent Friday at $40.36 per barrel Friday, on concerns about the freeze deal after Iran reiterated its refusal to freeze output. Given the low expectations for the meeting, there are mixed projections for what will happen to oil prices after the weekend.
"I think it's negative," said Kilduff. "I think the market has rewarded them richly for action and inaction will be punished."
Morse said the language used by producers will make a difference to the oil price, which he said is likely to fall after the meeting. "It very much depends on the statement," he said, in a conversation last Thursday.