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Iran, Iraq at loggerheads with Saudis ahead of OPEC meeting

Reuters  |  VIENNA 

By Ahmad Ghaddar and Vladimir Soldatkin

VIENNA (Reuters) - and Iraq are resisting pressure from to curtail production, making it hard for the Organization of the Petroleum Exporting Countries to reach a deal to limit output and boost the price of crude when it meets on Wednesday.

sources told Reuters a of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts.

On Tuesday, tensions rose further after wrote to saying it wanted to cut production by as much as 1 million barrels per day (bpd), much more than Riyadh is willing to offer, sources who saw the letter told Reuters.

"It is a response to Saudi telling what to produce," one of the sources said.

Iranian Minister Bijan Zanganeh told reporters upon arrival in Vienna that he was not prepared to reduce output: "We will leave the level of production (where) we decided in Algeria."

OPEC, which accounts for a third of global production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up prices, which have halved since mid-2014.

said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival increased output.

In recent weeks, Riyadh changed its stance and offered to cut its output by 0.5 million bpd, according to sources, while suggesting limit production at around 3.8 million bpd - in line with or slightly above the country's current output.

Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 million bpd. Iran's letter to suggested should cut output to 9.5 million bpd.

Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State. and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

The argument between Iraq and mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

As tensions within mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal.

One of Saudi Arabia's main allies, UAE Energy Minister Suhail bin Mohammed al-Mazroui, said on Tuesday the market would indeed rebalance itself within six months although an output deal would help speed the process.

Falih landed in Vienna on Tuesday evening, leaving little time for traditional pre-discussions with other ministers.

"The feeling today is mixed," Indonesian Energy Minister Ignasius Jonan told reporters on Tuesday when asked about the prospects of a deal. "I don't know. Let's see."

Documents prepared for Wednesday's propose the group cut production by 1.2 million bpd from October levels, an source familiar with the papers said.

The papers also propose reduce production to 10.07 million bpd from 10.54 million bpd in October and that freeze output at 3.797 million bpd, according to the source.

delayed the start of Wednesday's formal talks by one hour to 1000 GMT, a schedule posted on its website showed.

Additionally, ministers will meet informally at 0700 GMT on Wednesday before the formal talks, an source said.

GOLDMAN SEES DEFICIT

Brent crude was down more than 4 percent, near $46 a barrel, after the Indonesian and Iranian comments. [O/R]

Some analysts including Morgan Stanley and Macquarie have said prices will correct sharply if fails to reach a deal, potentially going as low as $35 per barrel.

Goldman Sachs, one of the most active banks in trading, said it saw prices averaging $45 a barrel until mid-2017 even without any deal and added the market was likely to move into a deficit in the second half of 2017.

A year ago, Goldman was saying a global glut would push prices to around $20. Prices fell to multi-year lows of $27 per barrel in January 2016.

Besides disagreements with and Iraq, has also signalled it was unhappy with Russia's position.

ministers from members Algeria and Venezuela travelled to Moscow on Tuesday to try to persuade non-Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

They made no comment as they emerged from their meeting. Russian Energy Minister Alexander Novak said he had no plan to travel to Vienna but could meet once it reaches a deal.

(Additional reporting by Rania El Gamal and Alex Lawler; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Iran, Iraq at loggerheads with Saudis ahead of OPEC meeting

VIENNA (Reuters) - Iran and Iraq are resisting pressure from Saudi Arabia to curtail oil production, making it hard for the Organization of the Petroleum Exporting Countries to reach a deal to limit output and boost the price of crude when it meets on Wednesday.

By Ahmad Ghaddar and Vladimir Soldatkin

VIENNA (Reuters) - and Iraq are resisting pressure from to curtail production, making it hard for the Organization of the Petroleum Exporting Countries to reach a deal to limit output and boost the price of crude when it meets on Wednesday.

sources told Reuters a of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts.

On Tuesday, tensions rose further after wrote to saying it wanted to cut production by as much as 1 million barrels per day (bpd), much more than Riyadh is willing to offer, sources who saw the letter told Reuters.

"It is a response to Saudi telling what to produce," one of the sources said.

Iranian Minister Bijan Zanganeh told reporters upon arrival in Vienna that he was not prepared to reduce output: "We will leave the level of production (where) we decided in Algeria."

OPEC, which accounts for a third of global production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up prices, which have halved since mid-2014.

said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival increased output.

In recent weeks, Riyadh changed its stance and offered to cut its output by 0.5 million bpd, according to sources, while suggesting limit production at around 3.8 million bpd - in line with or slightly above the country's current output.

Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 million bpd. Iran's letter to suggested should cut output to 9.5 million bpd.

Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State. and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

The argument between Iraq and mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

As tensions within mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal.

One of Saudi Arabia's main allies, UAE Energy Minister Suhail bin Mohammed al-Mazroui, said on Tuesday the market would indeed rebalance itself within six months although an output deal would help speed the process.

Falih landed in Vienna on Tuesday evening, leaving little time for traditional pre-discussions with other ministers.

"The feeling today is mixed," Indonesian Energy Minister Ignasius Jonan told reporters on Tuesday when asked about the prospects of a deal. "I don't know. Let's see."

Documents prepared for Wednesday's propose the group cut production by 1.2 million bpd from October levels, an source familiar with the papers said.

The papers also propose reduce production to 10.07 million bpd from 10.54 million bpd in October and that freeze output at 3.797 million bpd, according to the source.

delayed the start of Wednesday's formal talks by one hour to 1000 GMT, a schedule posted on its website showed.

Additionally, ministers will meet informally at 0700 GMT on Wednesday before the formal talks, an source said.

GOLDMAN SEES DEFICIT

Brent crude was down more than 4 percent, near $46 a barrel, after the Indonesian and Iranian comments. [O/R]

Some analysts including Morgan Stanley and Macquarie have said prices will correct sharply if fails to reach a deal, potentially going as low as $35 per barrel.

Goldman Sachs, one of the most active banks in trading, said it saw prices averaging $45 a barrel until mid-2017 even without any deal and added the market was likely to move into a deficit in the second half of 2017.

A year ago, Goldman was saying a global glut would push prices to around $20. Prices fell to multi-year lows of $27 per barrel in January 2016.

Besides disagreements with and Iraq, has also signalled it was unhappy with Russia's position.

ministers from members Algeria and Venezuela travelled to Moscow on Tuesday to try to persuade non-Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

They made no comment as they emerged from their meeting. Russian Energy Minister Alexander Novak said he had no plan to travel to Vienna but could meet once it reaches a deal.

(Additional reporting by Rania El Gamal and Alex Lawler; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Business Standard
177 22

Iran, Iraq at loggerheads with Saudis ahead of OPEC meeting

By Ahmad Ghaddar and Vladimir Soldatkin

VIENNA (Reuters) - and Iraq are resisting pressure from to curtail production, making it hard for the Organization of the Petroleum Exporting Countries to reach a deal to limit output and boost the price of crude when it meets on Wednesday.

sources told Reuters a of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts.

On Tuesday, tensions rose further after wrote to saying it wanted to cut production by as much as 1 million barrels per day (bpd), much more than Riyadh is willing to offer, sources who saw the letter told Reuters.

"It is a response to Saudi telling what to produce," one of the sources said.

Iranian Minister Bijan Zanganeh told reporters upon arrival in Vienna that he was not prepared to reduce output: "We will leave the level of production (where) we decided in Algeria."

OPEC, which accounts for a third of global production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up prices, which have halved since mid-2014.

said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

The deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival increased output.

In recent weeks, Riyadh changed its stance and offered to cut its output by 0.5 million bpd, according to sources, while suggesting limit production at around 3.8 million bpd - in line with or slightly above the country's current output.

Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 million bpd. Iran's letter to suggested should cut output to 9.5 million bpd.

Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State. and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

The argument between Iraq and mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

As tensions within mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal.

One of Saudi Arabia's main allies, UAE Energy Minister Suhail bin Mohammed al-Mazroui, said on Tuesday the market would indeed rebalance itself within six months although an output deal would help speed the process.

Falih landed in Vienna on Tuesday evening, leaving little time for traditional pre-discussions with other ministers.

"The feeling today is mixed," Indonesian Energy Minister Ignasius Jonan told reporters on Tuesday when asked about the prospects of a deal. "I don't know. Let's see."

Documents prepared for Wednesday's propose the group cut production by 1.2 million bpd from October levels, an source familiar with the papers said.

The papers also propose reduce production to 10.07 million bpd from 10.54 million bpd in October and that freeze output at 3.797 million bpd, according to the source.

delayed the start of Wednesday's formal talks by one hour to 1000 GMT, a schedule posted on its website showed.

Additionally, ministers will meet informally at 0700 GMT on Wednesday before the formal talks, an source said.

GOLDMAN SEES DEFICIT

Brent crude was down more than 4 percent, near $46 a barrel, after the Indonesian and Iranian comments. [O/R]

Some analysts including Morgan Stanley and Macquarie have said prices will correct sharply if fails to reach a deal, potentially going as low as $35 per barrel.

Goldman Sachs, one of the most active banks in trading, said it saw prices averaging $45 a barrel until mid-2017 even without any deal and added the market was likely to move into a deficit in the second half of 2017.

A year ago, Goldman was saying a global glut would push prices to around $20. Prices fell to multi-year lows of $27 per barrel in January 2016.

Besides disagreements with and Iraq, has also signalled it was unhappy with Russia's position.

ministers from members Algeria and Venezuela travelled to Moscow on Tuesday to try to persuade non-Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

They made no comment as they emerged from their meeting. Russian Energy Minister Alexander Novak said he had no plan to travel to Vienna but could meet once it reaches a deal.

(Additional reporting by Rania El Gamal and Alex Lawler; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

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