Opec states put pressure on Saudi Arabia for output cuts

Saudi Arabia dismissed reports that it may propose an eventual one million-barrel-a-day cut as 'baseless'

Cash-strapped Opec nations from Venezuela to Iran are piling pressure on Saudi Arabia to reduce oil output, yet the group's biggest producer remains opposed to a cut unless countries outside the organisation join the effort.

A year after Saudi Arabia spearheaded Opec's decision to maintain production amid slumping prices, the group is grappling with crude near a six-year low as supply swamps demand. Venezuela and Ecuador want Opec to agree to output curbs on Friday when members meet in Vienna, officials said this week. Iran has called on the group to trim production to accommodate its own output increase next year.

Saudi Arabia, the Organisation of Petroleum Exporting Countries' de facto leader, on Thursday dismissed a report that it may propose an eventual one million-barrel-a-day cut as "baseless." Energy Intelligence reported earlier that such a reduction, which would be conditional on the participation of non-Opec producers including Russia, wouldn't be agreed on Friday but could take effect in 2016. No producers outside Opec have given any indication they would agree to such an arrangement.

Russian Energy Minister Alexander Novak said Thursday that the country doesn't see a production cut as viable and has no plans to take part in the Opec meeting.

It would be an "enormous surprise" if the report turns out to be accurate, Neil Atkinson, head of analysis at Lloyd's List Intelligence, said Thursday in an interview with Bloomberg Television. "It flies in the face of everything that the Saudis have been saying since the November 27 meeting last year," he said.

While Saudi Arabia has repeatedly said its policy of defending market share is working, it has also expressed willingness to cooperate with producers outside Opec.

Officials from the West Asian nation and Venezuela met with Russia and Mexico a year ago in Vienna, but the summit failed to deliver any agreement on joint output curbs.

Opec's in-house magazine reiterated in August that the group was ready to talk to other producers to get a "fair" price for oil.

Iranian Oil Minister Bijan Namdar Zanganeh said Thursday that Opec shouldn't wait for non-members to collaborate before reducing its own output.

"We are Opec and it is not rational to hold our decision subject to the reaction of the non-Opec producers," he told reporters upon arriving in Vienna.

Iran plans to ramp up its own output in 2016 following the expected removal of international sanctions. The country won't accept any limit on its production that would bring it below pre-sanctions levels, Zanganeh said.

At Opec's last summit in June, Saudi Arabia faced only mild criticism from other member countries. This time, the continued decline in prices has prompted stronger protest, with Venezuela organizing a number of side-meetings with other member states in Vienna to rally support for production cuts. Officials from the South American nation met Thursday with Ecuador, Algeria, Iraq and Iran.

Brent crude, the global benchmark, closed on Wednesday at $42.49 a barrel, the lowest since the financial crisis of 2008 and 2009. It traded at $43.38 as of 11:06 a.m. in London on Thursday. International oil traders including Vitol Group have said rising stockpiles will continue to weigh on the market and prices may not rally until 2017.