No Doha Deal Means No Sabotage of Current Oil Price Recovery: Goldman Sachs

Goldman Sachs' Michele Della Vigna says it has taken 18 months to start to rebalance the oil market.

Analysts are breathing a sigh of relief in the wake of the aborted attempt by 16 Organization of the Petroleum Exporting Countries (OPEC) members as well as some non-members to curb oil production.

That's because had a deal been struck at the April 17 Doha meeting - a scenario that critics said was remote but not beyond the realm of possibility – it would have thrown a monkey wrench into the market recovery that appears to be gaining traction.

Michele Della Vigna, co-head of European Equity Research at Goldman Sachs, told CNBC that "It has taken 18 months to start to rebalance the oil market with falling non-OPEC production in a variety of countries and demand showing signs of recovery, which means we are getting there, we're getting to a new equilibrium.

"So why delay it with a self-defeating rally that would bring an oil price to above $40 a barrel too quickly and one that would incentivize producers to ramp back up production?"

The weekend talks fell apart when Saudi Arabia declared it would not freeze output unless Iran – which has persistently stated its intention increase and not curb its production levels - followed suit.

As a result, oil prices fell over 5 percent in early Asian trade on Monday and were still trading around $41.21 per barrel for Brent crude and $38.47 for West Texas Intermediate in early European trade.

Alluding to the fact that no deal means U.S. producers will continue to be squeezed in the short-term, Della Vigna pointed out that "I think no deal is probably better for the longer-term because it continues this process of rebalancing and there is no rebalancing without pressure and pressure comes through lower oil prices, through tighter credit, and we're seeing all of that playing out nicely."

As for the mindset of participants of the failed talks, Qatar Oil Minister Mohammed Saleh Abdulla Al Sada told reporters on Sunday, "The general conclusion was that we need more time to consult among ourselves in OPEC and non-OPEC producers."