Saudis offer oil cut for OPEC deal if Iran freezes output: sources

Fri Sep 23, 2016 1:06pm EDT
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By Rania El Gamal and Dmitry Zhdannikov

DUBAI/LONDON (Reuters) - Saudi Arabia has offered to reduce oil production if rival Iran caps its own output this year, four sources familiar with the discussions told Reuters, as Riyadh tries to strike an elusive OPEC deal to curtail supply and boost prices.

The offer, which has yet to be accepted or rejected by Tehran, was made this month, the sources told Reuters on condition of anonymity.

OPEC holds an informal meeting next week in Algiers, which non-OPEC Russia will also join. The group, which produces a third of the world's oil, will also have a formal gathering in Vienna at the end of November.

"The Algeria meeting is not a decision making meeting. It is for consultations," said a source familiar with the Saudi oil thinking.

Riyadh is ready to cut output to levels seen early this year in exchange for Iran freezing production at the current level, which is 3.6 million barrels per day (bpd), the sources said.

"They (the Saudis) are ready for a cut but Iran has to agree to freeze," one source said. Three more sources confirmed the offer was presented to Tehran.

A source familiar with Saudi oil thinking said: "Our goal is to reach a consensus and look at different scenarios for the production levels of the OPEC countries. We are looking forward to a credible and transparent solution which would lead to market stability".

A source familiar with Iranian thinking declined to comment on details of the proposal but did not rule out a compromise next week: "Let them all talk face to face."   Continued...

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, May 30, 2016. REUTERS/Heinz-Peter Bader