Saudi Arabia, Gulf OPEC ready to cut oil output by 4 percent - sources

DUBAI (Reuters) - Saudi Arabia and its Gulf OPEC allies are willing to cut 4 percent from their peak oil output, energy ministers from the Gulf countries told their Russian counterpart this week, sources familiar with the matter told Reuters.

The offer was made at a closed-door meeting in Riyadh, where the ministers met on Sunday. But Russian Energy Minister Alexander Novak told the officials that Moscow would not cut output, but rather freeze it at current levels, the sources said.

The 4 percent offer is likely to be made at a meeting of OPEC experts and officials from other oil producers such as Russia on Oct. 28-29 in Vienna, to nail down the details of last month's OPEC production-cap agreement in Algeria.

Iraq, OPEC's No. 2 producer, said this week that it would not cut output and should be exempted from any curbs as it needs funds to fight Islamic State. Baghdad's stance is likely to face opposition from Riyadh and its Gulf allies, OPEC sources said.

"If there is a cut, then everyone must cut. No exemptions," one OPEC source said, commenting on Iraq's demands.

There is a general understanding that only Libya, Nigeria and Iran should be exempt as their output had been hit by wars and sanctions, three OPEC sources said.

(Reporting by Rania El Gamal; Editing by Dale Hudson)