Below, CommodityHQ.com takes a closer look at the rationale behind these decisions and the implications for the market over the near and long term.

The Doha talks failed because Saudi Arabia and Iran couldn’t reach a compromise. While both countries made their demands clear before the talks, Saudi officials were likely hoping that Iran would cave in at the last minute to international pressure. The abrupt end to the meeting surprised many in attendance given that these differences were well known in advance, while there is a lot on the line with prices reaching record low levels.

Saudi Arabia’s oil minister Ali al-Naimi had previously indicated that the country would consider a production freeze without Iran’s participation, but he was overruled by the deputy crown prince who phoned in from Riyadh to take the offer off the table. The move represents a big change in who controls the country’s energy policies and could introduce some new dynamics to the market in future OPEC and non-OPEC meetings.

Iran remained adamant that it reach 4 million barrels per day in production before considering any kind of production freeze. After years of economic sanctions, the country has only just begun to bring production back online and remains below historical production levels. The country currently produces approximately 3.1 million barrels per day and plans to increase production to the four mark over the coming months with or without any external support.

Crude oil’s reaction to the failure of the Doha talks was muted by a Kuwaiti strike that reduced its output by more than half. While the strike provides a welcome short-term reprieve from lower prices, a resolution could quickly send prices sharply lower as the impact of the Doha talks is felt. Some analysts believe that prices could fall back to $25 per barrel as producers look to maintain their market share by pumping oil at record levels.

Morgan Stanley analysts believe that Saudi Arabia’s threat to lift production from 10.2 million barrels per day to 11 million barrels per day may also set back a rebalancing of the oil market to mid- to late 2018. With U.S. crude production falling 90,000 barrels per day in March alone, high-cost producers are quickly leaving the market as the commodity’s price plunges, which could help stabilize prices even without a formal freeze – it will just take longer than it otherwise would.

Crude oil prices could fall even more in the event that the market becomes so oversupplied that there is no storage. In this case, producers may be forced to rapidly reduce prices in order to avoid dumping the commodity.

The bigger problem facing investors is the geopolitical risks stemming from depressed crude oil prices. Without higher prices, many oil-exporting nations will continue to see revenue dry up and may be unable to balance their national budgets. Saudi Arabia and other countries may be able to afford these short-term imbalances, but countries like Russia and Venezuela have found themselves in a crisis due to a lack of energy revenue.

The Doha talks may have been doomed from the beginning with rivals Saudi Arabia and Iran refusing a compromise. Iran doesn’t want to cut its production until reaching historical norms following the lifting of its sanctions, and Saudi Arabia won’t freeze its crude oil production unless Iran agrees to do the same. The failure of these talks sent crude oil prices sharply lower, but they have been temporarily lifted by a Kuwaiti oil strike.

The long-term impact of the failure to reach a compromise will likely take place over a longer time frame until the market rebalances and potential geopolitical risks stemming from low prices abate.