Doha oil producers close to agreeing output freeze - sources

By Rania El Gamal and Reem Shamseddine

DOHA (Reuters) - Oil producing countries meeting in Doha on Sunday appeared close to agreeing on an output freeze to prop up crude prices, the first such deal in 15 years, official sources told Reuters.

A draft agreement circulating in Doha and seen by Reuters says countries' average daily crude oil production in each month would not exceed the level recorded in January this year.

The freeze would last until Oct. 1 this year, and producers would meet again in October in Russia to review their progress in engineering "a progressive recovery of the oil market", the draft reads.

Final agreement has not been reached on the draft, but several senior sources in national oil ministries said they believed a deal could be achieved.

"I am optimistic," acting Kuwaiti oil minister Anas Khalid al-Saleh said on Saturday of prospects for a deal.

"?There is only one proposal. Freeze at the January level till October," another delegate said, declining to be named because of political sensitivities. "There is a proposal to meet in October and to look forward."

"We have a deal," a third senior oil source told Reuters.

Over a dozen oil-producing countries inside and outside OPEC have officially confirmed they would attend the meeting in Doha - although major producer Iran has said it would not participate as it could not accept proposals to freeze its production.

During the freeze, producers would continue to consult on the best ways to bolster the oil market, and the deal would be open for other states to join, the draft agreement says.

The draft provides for the creation of a "high level monitoring committee" of two oil ministers from OPEC countries and two from non-OPEC countries; they would be assisted by a working group of experts.

Although a freeze would be a significant step for oil producers, it would have only a limited impact on global supply and the market is unlikely to rebalance before 2017, the International Energy Agency said on Thursday.

The role of Iran, which wants to ramp up production after the lifting of economic sanctions on it in January this year, is a key issue overhanging the Doha talks.

"We have told some OPEC and non-OPEC members like Russia that they should accept the reality of Iran's return to the oil market," Tehran's oil minister Bijan Namdar Zanganeh was quoted as saying by his ministry's news agency SHANA on Saturday.

"If Iran freezes its oil production at the February level, it means it cannot benefit from the lifting of sanctions."

Publicly, Saudi Arabia has taken a tough stance on Iran. Deputy Crown Prince Mohammed bin Salman told Bloomberg in recent days that the kingdom would only restrain its output if all other major producers, including Iran, agreed to freeze their production. It was not clear if Saudi Arabia would stick to this position at the talks.

(Reporting by Rania El Gamal; Writing by Andrew Torchia; Editing by Stephen Coates)