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Saudi signals compromise for Iran as OPEC debates output cut

Reuters  |  VIENNA 

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA (Reuters) - Saudi Energy Minister Khalid al-Falih said on Wednesday was close to clinching a deal to limit output, adding Riyadh would agree to freezing production at pre-sanctions levels.

The comments could be seen as a compromise by Riyadh, which in recent weeks insisted that fully participate in any cut.

Brent crude futures jumped more than 5 percent to above $49 a barrel. The Organization of the Petroleum Exporting Countries started a closed-door session at around 1000 GMT with a news conference scheduled for 1500 GMT.

Falih also said was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than 1 million bpd, and hoped Russia and other non-members would contribute a cut of another 0.6 million bpd.

But he added that even if failed to reach a deal, the market would slowly recover as fundamentals were moving in the right direction.

"We believe that non-growth has reversed and also most of the growth we've seen is already behind us," he told reporters.

Clashes between and arch-rival have dominated many previous meetings.

On Tuesday, wrote to saying it wanted to cut production by as much as 1 million bpd, much more than Riyadh was willing to offer, sources who saw the letter told Reuters.

But the tone changed on Wednesday. "I'm optimistic," said Iranian Minister Bijan Zanganeh, adding there had been no request for to cut output.

The 14-country group, 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 foe 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.

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.

An Algerian energy source said ministers so far supported the proposal.

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.

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.

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; 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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Saudi signals compromise for Iran as OPEC debates output cut

VIENNA (Reuters) - Saudi Energy Minister Khalid al-Falih said on Wednesday OPEC was close to clinching a deal to limit oil output, adding Riyadh would agree to Iran freezing production at pre-sanctions levels.

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA (Reuters) - Saudi Energy Minister Khalid al-Falih said on Wednesday was close to clinching a deal to limit output, adding Riyadh would agree to freezing production at pre-sanctions levels.

The comments could be seen as a compromise by Riyadh, which in recent weeks insisted that fully participate in any cut.

Brent crude futures jumped more than 5 percent to above $49 a barrel. The Organization of the Petroleum Exporting Countries started a closed-door session at around 1000 GMT with a news conference scheduled for 1500 GMT.

Falih also said was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than 1 million bpd, and hoped Russia and other non-members would contribute a cut of another 0.6 million bpd.

But he added that even if failed to reach a deal, the market would slowly recover as fundamentals were moving in the right direction.

"We believe that non-growth has reversed and also most of the growth we've seen is already behind us," he told reporters.

Clashes between and arch-rival have dominated many previous meetings.

On Tuesday, wrote to saying it wanted to cut production by as much as 1 million bpd, much more than Riyadh was willing to offer, sources who saw the letter told Reuters.

But the tone changed on Wednesday. "I'm optimistic," said Iranian Minister Bijan Zanganeh, adding there had been no request for to cut output.

The 14-country group, 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 foe 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.

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.

An Algerian energy source said ministers so far supported the proposal.

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.

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.

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; 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

Saudi signals compromise for Iran as OPEC debates output cut

By Ahmad Ghaddar, Alex Lawler and Rania El Gamal

VIENNA (Reuters) - Saudi Energy Minister Khalid al-Falih said on Wednesday was close to clinching a deal to limit output, adding Riyadh would agree to freezing production at pre-sanctions levels.

The comments could be seen as a compromise by Riyadh, which in recent weeks insisted that fully participate in any cut.

Brent crude futures jumped more than 5 percent to above $49 a barrel. The Organization of the Petroleum Exporting Countries started a closed-door session at around 1000 GMT with a news conference scheduled for 1500 GMT.

Falih also said was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than 1 million bpd, and hoped Russia and other non-members would contribute a cut of another 0.6 million bpd.

But he added that even if failed to reach a deal, the market would slowly recover as fundamentals were moving in the right direction.

"We believe that non-growth has reversed and also most of the growth we've seen is already behind us," he told reporters.

Clashes between and arch-rival have dominated many previous meetings.

On Tuesday, wrote to saying it wanted to cut production by as much as 1 million bpd, much more than Riyadh was willing to offer, sources who saw the letter told Reuters.

But the tone changed on Wednesday. "I'm optimistic," said Iranian Minister Bijan Zanganeh, adding there had been no request for to cut output.

The 14-country group, 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 foe 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.

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.

An Algerian energy source said ministers so far supported the proposal.

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.

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.

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; 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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