|
 Saudi Arabia, the largest oil producer in the Organization of the
Petroleum Exporting Countries (OPEC), was prepared to propose
members cut oil output by 1 million barrels per day next year if
non-OPEC countries joined in, industry publication Energy
Intelligence reported.
A Saudi source said later the report was "baseless" but declined
further comment and a source at Energy Intelligence said it stood by
its story. Oil prices rose 3 percent on Thursday but analysts said a
global deal would be hard to reach.
Saudi Arabia has long insisted it would cut production only if
fellow OPEC members and non-OPEC countries joined in. The report
quoted a senior OPEC delegate as saying the Saudis would agree to
cuts if Iraq freezes production rises and Iran and non-members such
as Russia, Mexico, Oman and Kazakhstan contribute.
But Russia and OPEC members Iran and Iraq quickly rejected the idea.
OPEC and non-OPEC producers have not cooperated to tackle low oil
prices since they joined forces 15 years ago to help the market
recover from the 1998 financial crisis.
 Since then top non-OPEC producer Russia has repeatedly resisted
calls for joint action and grown its output by 70 percent. Iran also
wants to increase output after years of Western sanctions.
OPEC's policy meeting will be held in Vienna on Friday. OPEC also
held a rare informal meeting there on Thursday but the Saudis made
no proposals, according to ministers and delegates.
"We do not accept any discussion about increases of Iran production
after the lifting of sanctions. It is our right and anyone cannot
limit us to do it. We will not accept anything in this regard,"
Iranian oil minister Bijan Zangeneh told reporters in Vienna before
the informal meeting.
"And we do not expect out colleagues in OPEC to put pressure on
us... It is not acceptable, it's not fair."
Iran will raise production by up to 1 million barrels per day
following years of forced curbs because of the sanctions over its
atomic program, he added.
Russian oil minister Alexander Novak told local news agency RIA that
he saw no need for Moscow to decrease oil production, adding that he
did not expect OPEC to change output policies at its meeting on
Friday.
Iraqi oil minister Adel Abdel Mahdi said the country, which saw a
spectacular rise in 2015 output, was also keeping its production
plans. BUDGET SQUEEZE
Saudi Arabia has been the main driver of OPEC's current policies to
pump record volumes of crude to push higher cost producers, such as
newcomers tapping into U.S. shale, out of the market, so if a
proposal to cut output was confirmed it would suggest a change in a
approach.
[to top of second column] |
U.S. output has decreased over the past year but other producers
such as Russia remained more resilient. As a result oil prices more
than halved in the past 18 months, causing large budget shortfalls
across most energy rich nations.
For Saudi Arabia, the prospect of big fiscal deficits has already
prompted officials to float the idea of potentially unpopular
reforms, including introducing value added tax and cutting energy
subsidies.
Reduced oil revenue is also causing some of the influential business
class to push Riyadh to quickly find an end to its expensive war in
Yemen, the kingdom's biggest strategic gambit in decades, and one
that defines King Salman's foreign policy.
Saudi Arabia's proposal may also be seen as an attempt to head off
calls for action from poorer OPEC members such as Venezuela, but the
conditions are tough to implement.
"It is very difficult to cut one million bpd collectively. The
Saudis do not want to change their previous talk. No cut without
cooperation," a Gulf OPEC source told Reuters.
Oil prices rose from near their 2015 lows on the Energy Intelligence
report, with Brent <LCOc1> up by around 3 percent to $43.77 by 1715
GMT, though traders said they were cautious.
Some banks, including Goldman Sachs, are predicting oil could fall
as low as $20 a barrel if a global glut persists.
"I think it (the Saudi idea) is a pushing back against the idea of
'lower for longer' prices," said Paul Horsnall from Standard
Chartered.
(Additional reporting by Rania El Gamal, Reem Shamseddine, Vladimir
Soldatkin; Writing by Dmitry Zhdannikov; Editing by Michael Urquhart
and Anna Willard)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
