Saudi Crown Prince to discuss Neutral Zone oil output during Kuwait trip: source

By Rania El Gamal

DUBAI (Reuters) - Saudi Arabia's Crown Prince Mohammad bin Salman is expected to discuss the resumption of oil output from the Neutral Zone, which the kingdom's shares with Kuwait, during a trip to the Gulf Arab state on Sunday, a source familiar with the matter told Reuters.

Prince Mohammad will be accompanied by Energy Minister Khalid al-Falih during his trip to Kuwait, two separate sources said.

The Saudi crown prince will hold talks with Kuwaiti Emir Sheikh Sabah al-Ahmad al-Jaber al-Sabah, the Kuwaiti News Agency has reported.

The closure of the Neutral Zone's jointly operated oilfields, mainly Khafji and Wafra, has become a political sticking point between the two Gulf OPEC allies and senior officials have been trying to resolve the issue for months.

It was not clear whether the renewed talks on the Neutral Zone would result in the resumption of oil production from the area, one of the sources said.

The Saudi government media office did not immediately respond to a Reuters request for comment.

Khafji was shut in October 2014 for environmental reasons and Wafra has been shut since May 2015 due to operating difficulties.

Any restart would come at a sensitive time for the oil markets as Washington presses Riyadh to increase oil production to bring crude prices down.

Oil prices rose more than 1 percent on Friday, with Brent climbing to a four-year high, as U.S. sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production.

U.S. President Donald Trump called Saudi Arabia's King Salman on Saturday and they discussed efforts being made to maintain supplies to ensure oil market stability and global economic growth, Saudi state news agency SPA reported.

The call comes days after the U.S. president called again on OPEC to boost crude output to cool the market ahead of midterm elections in November for U.S. Congress members.

Saudi Arabia is the world's top oil exporter and OPEC's de-facto leader. The kingdom, the only country with a significant spare capacity, is worried about the tight ability of other producers to raise output amid declining Iranian supplies.

The resumption of the Neutral Zone's oilfields could add up to 500,000 barrels per day of oil output capacity to both Saudi Arabia and Kuwait.

(Reporting by Rania El Gamal; Editing by Keith Weir)