Saudis court Iran over oil output

VIENNA, September 23, 2016 – Saudi Arabia has reportedly courted Iran in an effort to lay the groundwork for a deal on freezing oil production, sources familiar with the matter said on Friday.

According to various media outlets, Saudi and Iranian officials held talks in Vienna earlier this week to prepare for next week’s OPEC gathering in Algeria. It remains unclear whether the Saudi proposal was presented in the Austrian capital.

Sources cited by Reuters on Friday said that Saudi Arabia has offered to cut oil output on the condition that Iran freezes its production at present levels of around 3.6 million bopd. “They [the Saudis] are ready for a cut but Iran has to agree to freeze,” a source was quoted as saying.

It could not be determined how by much the Saudis would be willing to reduce their output, but evidence suggest it could be in the range of 450,000 bopd. For most of the first six months of 2016, Saudi Arabia produced some 10.2 million bopd. In July and August, the country pumped 10.63 million and 10.67 million bopd, respectively.

The same sources said that if the Iranians accept the proposal, the UAE, Kuwait and Qatar would be willing to follow Saudi Arabia in reducing their output. On Thursday, Iraqi Minister of Oil Jabar Ali Al Luaibi said that his country would stick to an estimated market share of between 4.75 million and 5 million bopd, signalling an increase in production.

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