Saudi remarks on oil surge test prospects for output freeze

Sat Apr 16, 2016 4:50pm EDT
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By Rania El Gamal

DOHA (Reuters) - Saudi Arabia's top oil official, Deputy Crown Prince Mohammed bin Salman, said Riyadh could boost output immediately and almost double it long term, in comments that could threaten the signing of a global production freeze deal planned for Sunday.

The second in line to the throne of the world's largest crude exporter added in remarks to Bloomberg that the kingdom would only restrain its output if all other major producers, including Iran, agree to freeze their production.

His remarks appeared to cast doubt on a freeze plan to be discussed by producers of the Organization of the Petroleum Exporting Countries and non-OPEC member countries such as Russia on Sunday in the Qatari capital Doha.

Iran, a fellow OPEC member but also Saudi Arabia's regional rival, said it would not participate in Sunday's meeting as it could not accept proposals to freeze production.

"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," Oil Minister Bijan Namdar Zanganeh was quoted as saying by the oil ministry's news agency SHANA. "If Iran freezes its oil production at the February level, it means it cannot benefit from the lifting of sanctions."

Yet OPEC delegates told Reuters there was still a chance for a deal on Sunday if participants can find a compromise - and avoid a repeat of the last OPEC meeting in December where Iran and Saudi Arabia clashed over output policy.

The fact that Tehran's stance has not torpedoed the convening of the meeting suggests fellow producers may be prepared to tolerate a rise in Iran's output, provided there is no new price rout.

The freeze proposal has helped oil prices to rise over 60 percent from a 12-year low near $27 a barrel hit in January, despite little change to the market's supply glut.   Continued...

Fuel price and last sale of fuel is seen on a fuel pump during early hours in desert near the village of Salwa, Qatar-Saudi border, south of Eastern province of Khobar, Saudi Arabia January 29, 2016. REUTERS/Hamad I Mohammed