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Saudis offer oil cut for OPEC deal if Iran freezes output - sources

By Rania El Gamal and Dmitry Zhdannikov

DUBAI/(Reuters) - Arabia has offered to reduce oil production if rival agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.

The offer, which has yet to be accepted or rejected by Tehran, was made this month, the sources told on condition of anonymity.

Riyadh is ready to cut output to levels seen early this year in exchange for freezing production at the current level, which is 3.6 million barrels per day (bpd), the sources said.

"They (the Saudis) are ready for a cut but has to agree to freeze," one source said. Three more sources confirmed the offer was presented to Tehran.

A source familiar with Iranian thinking declined to comment on details of the proposal but did not rule out the possibility of a compromise next week: "Let them all talk face to face."

There was no official comment from Arabia or Iran.

output usually drops in winter and spikes during hot summer months, hence could dismiss the proposed reduction as an attempt by Riyadh to present a natural decline as a cut.

has been promising to boost output to 4 million bpd, although production has stagnated in the past three months at around 3.6 million bpd, indicating the new push might be difficult without additional investments.

The first source did not say by how much Riyadh would cut if agreed to a freeze.

Riyadh's production has spiked since June due to summer demand, reaching a record high in July of 10.67 million bpd and edging down to 10.63 million bpd in August. From January to May, Arabia produced around 10.2 million bpd.

Previously, the Saudis have refused to discuss production cuts.

officials from Arabia and met this week in Vienna. According to sources, the gathering did not discuss the proposal, focusing instead on baseline production figures. The produced no breakthrough, the sources said.

Two sources said Arabia's Gulf allies the United Arab Emirates, Qatar and Kuwait were expected to contribute to any output reduction.

Arabia, by far the largest producer in the Organization of the Petroleum Exporting Countries, will shoulder the biggest cut, the sources said.

The proposal can be seen as a shift by Riyadh, which orchestrated the current policy in 2014 by refusing to cut output alone to support prices and chose to defend market share against rivals, particularly high-cost producers.

A fall in oil prices to $30-$50 per barrel from levels as high as $115 seen in June 2014 led to a boost in global oil demand and a decline in high-cost supplies such as those from the United States.

But the strategy caused a rift in OPEC, whose poorer members have faced a budget crisis and unrest. Riyadh and its Gulf allies also had to tighten their belts after a decade of generous public spending.

As the pain of cheap oil grew and pressures on finances increased, Riyadh and Tehran signalled they were willing to show more flexibility to prop up prices.

However, the first attempt at a global production pact collapsed in April when Riyadh insisted Tehran participate. has said it will not join any such agreement until it regains market share and boosts output to pre-sanctions levels of around 4 million bpd.

members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from Sept. 26-28. Non-producer Russia is also attending the forum.

(Additional reporting by Alex Lawler; 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

Saudis offer oil cut for OPEC deal if Iran freezes output - sources

Reuters  |  DUBAI/LONDON 

By Rania El Gamal and Dmitry Zhdannikov

DUBAI/(Reuters) - Arabia has offered to reduce oil production if rival agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.

The offer, which has yet to be accepted or rejected by Tehran, was made this month, the sources told on condition of anonymity.

Riyadh is ready to cut output to levels seen early this year in exchange for freezing production at the current level, which is 3.6 million barrels per day (bpd), the sources said.

"They (the Saudis) are ready for a cut but has to agree to freeze," one source said. Three more sources confirmed the offer was presented to Tehran.

A source familiar with Iranian thinking declined to comment on details of the proposal but did not rule out the possibility of a compromise next week: "Let them all talk face to face."

There was no official comment from Arabia or Iran.

output usually drops in winter and spikes during hot summer months, hence could dismiss the proposed reduction as an attempt by Riyadh to present a natural decline as a cut.

has been promising to boost output to 4 million bpd, although production has stagnated in the past three months at around 3.6 million bpd, indicating the new push might be difficult without additional investments.

The first source did not say by how much Riyadh would cut if agreed to a freeze.

Riyadh's production has spiked since June due to summer demand, reaching a record high in July of 10.67 million bpd and edging down to 10.63 million bpd in August. From January to May, Arabia produced around 10.2 million bpd.

Previously, the Saudis have refused to discuss production cuts.

officials from Arabia and met this week in Vienna. According to sources, the gathering did not discuss the proposal, focusing instead on baseline production figures. The produced no breakthrough, the sources said.

Two sources said Arabia's Gulf allies the United Arab Emirates, Qatar and Kuwait were expected to contribute to any output reduction.

Arabia, by far the largest producer in the Organization of the Petroleum Exporting Countries, will shoulder the biggest cut, the sources said.

The proposal can be seen as a shift by Riyadh, which orchestrated the current policy in 2014 by refusing to cut output alone to support prices and chose to defend market share against rivals, particularly high-cost producers.

A fall in oil prices to $30-$50 per barrel from levels as high as $115 seen in June 2014 led to a boost in global oil demand and a decline in high-cost supplies such as those from the United States.

But the strategy caused a rift in OPEC, whose poorer members have faced a budget crisis and unrest. Riyadh and its Gulf allies also had to tighten their belts after a decade of generous public spending.

As the pain of cheap oil grew and pressures on finances increased, Riyadh and Tehran signalled they were willing to show more flexibility to prop up prices.

However, the first attempt at a global production pact collapsed in April when Riyadh insisted Tehran participate. has said it will not join any such agreement until it regains market share and boosts output to pre-sanctions levels of around 4 million bpd.

members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from Sept. 26-28. Non-producer Russia is also attending the forum.

(Additional reporting by Alex Lawler; 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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Saudis offer oil cut for OPEC deal if Iran freezes output - sources

DUBAI/LONDON (Reuters) - Saudi Arabia has offered to reduce oil production if rival Iran agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.

By Rania El Gamal and Dmitry Zhdannikov

DUBAI/(Reuters) - Arabia has offered to reduce oil production if rival agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.

The offer, which has yet to be accepted or rejected by Tehran, was made this month, the sources told on condition of anonymity.

Riyadh is ready to cut output to levels seen early this year in exchange for freezing production at the current level, which is 3.6 million barrels per day (bpd), the sources said.

"They (the Saudis) are ready for a cut but has to agree to freeze," one source said. Three more sources confirmed the offer was presented to Tehran.

A source familiar with Iranian thinking declined to comment on details of the proposal but did not rule out the possibility of a compromise next week: "Let them all talk face to face."

There was no official comment from Arabia or Iran.

output usually drops in winter and spikes during hot summer months, hence could dismiss the proposed reduction as an attempt by Riyadh to present a natural decline as a cut.

has been promising to boost output to 4 million bpd, although production has stagnated in the past three months at around 3.6 million bpd, indicating the new push might be difficult without additional investments.

The first source did not say by how much Riyadh would cut if agreed to a freeze.

Riyadh's production has spiked since June due to summer demand, reaching a record high in July of 10.67 million bpd and edging down to 10.63 million bpd in August. From January to May, Arabia produced around 10.2 million bpd.

Previously, the Saudis have refused to discuss production cuts.

officials from Arabia and met this week in Vienna. According to sources, the gathering did not discuss the proposal, focusing instead on baseline production figures. The produced no breakthrough, the sources said.

Two sources said Arabia's Gulf allies the United Arab Emirates, Qatar and Kuwait were expected to contribute to any output reduction.

Arabia, by far the largest producer in the Organization of the Petroleum Exporting Countries, will shoulder the biggest cut, the sources said.

The proposal can be seen as a shift by Riyadh, which orchestrated the current policy in 2014 by refusing to cut output alone to support prices and chose to defend market share against rivals, particularly high-cost producers.

A fall in oil prices to $30-$50 per barrel from levels as high as $115 seen in June 2014 led to a boost in global oil demand and a decline in high-cost supplies such as those from the United States.

But the strategy caused a rift in OPEC, whose poorer members have faced a budget crisis and unrest. Riyadh and its Gulf allies also had to tighten their belts after a decade of generous public spending.

As the pain of cheap oil grew and pressures on finances increased, Riyadh and Tehran signalled they were willing to show more flexibility to prop up prices.

However, the first attempt at a global production pact collapsed in April when Riyadh insisted Tehran participate. has said it will not join any such agreement until it regains market share and boosts output to pre-sanctions levels of around 4 million bpd.

members will meet on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from Sept. 26-28. Non-producer Russia is also attending the forum.

(Additional reporting by Alex Lawler; 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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