Did the Doha meeting of oil producing countries end before it even began? Not necessarily.
On Saturday, Iran announced that it would not send a representative to the confab, which is being closely watched by analysts for hints on whether OPEC and non-OPEC producers will agree to a freeze of crude output. Given that Saudi Arabia has insisted that any deal include all member countries, Iran's absence was interpreted by some as a death knell for an agreement.
Yet sources in Doha told CNBC say that for several reasons, a "soft deal" on freezing production is still a possibility, even without Iran's involvement. Minus Tehran, oil producers assembled in Doha still account for nearly half of the world's daily output. With the exception of Libya and Iran, all of OPEC is represented at the meeting.
Though Iran's increased production and exports are perhaps the single biggest factor fueling global oversupply, the producers here still have the power to either cap or cut a sizable chunk of production. Although a lid on current levels would be at near record output, it would at least help ensure that more oil isn't put on the market by the non-Iranian producers.
Ahead of Sunday's meeting, the Sheraton Hotel in Doha is abuzz with oil ministers from around the globe, along with the journalists that cover them as final preparations are made for Sunday's oil summit. Extra security can be seen throughout the hotels property, and airport style security checks have been set up at every entrance.
Inside the ballroom where the ministers will meet, flags of each nation represented are in place, indicating where each country's representatives will be seated. Saudi Arabian oil Minister Ali Al Naimi will be sitting between Alexander Novak, the Minister of Energy of the Russian Federation, along with a representative form Trinidad.
Oil exporting countries are keenly aware that U.S. daily oil production is down a few hundred thousand barrels, and is now just under 9 million barrels per day. America's declining output helps empower the Doha group because it lessens the bargaining power of Iran, which is trying to produce as much crude as possible after being nearly shut out of world markets because of Western sanctions.
Moreover, the fact that this meeting is happening at all is in itself news, because it highlights the growing realization among OPEC members, as well as Russia and Norway, that something must be done to boost sagging oil prices. Most OPEC producers are still profitable below $50 per barrel, yet that's just on a pure cost of production basis. It doesn't account for their huge financial need to fund their petrodollar social welfare states.
The Saudis and Russians have referenced a possible deal to freeze output since February, but some think the meeting may serve another purpose: Shoring up broader support for a freeze that could put pressure on Iran to comply. Sources in Doha believe that Qatar would not have organized the meeting if it was unlikely to produce at least the outlines of an agreement.
Bearing all these moving parts in mind, the final outcome may include at least one of the following elements:
1. A "soft freeze" that would not include Iran, but may at least prop up oil prices in the near term;
2. No deal, but a gentleman's agreement that serves as a bridge to June's OPEC meeting. This would likely put downward pressure on crude, but it could help limit any losses as traders look ahead to the OPEC conference;
3. All producers at the meeting agree to a production cut, which is less likely but could send prices spiking;
4. No deal at all, which leads the conference to collapse into bitter recrimination, and sends oil prices reeling when Asia begins trading on Sunday evening.