OPEC set for no deal as Iran rejects Saudi oil output offer

Tue Sep 27, 2016 2:08pm EDT
 
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By Rania El Gamal, Alex Lawler and Vladimir Soldatkin

ALGIERS (Reuters) - Iran rejected on Tuesday an offer from Saudi Arabia to limit its oil output in exchange for Riyadh cutting supply, dashing market hopes the two major OPEC producers would find a compromise this week to help ease a global glut of crude.

"The gap (in views) between OPEC countries is narrowing. I don't expect that an agreement will come out of the consultations tomorrow," Saudi Energy Minister Khalid al-Falih told reporters.

Iranian Oil Minister Bijan Zanganeh said earlier: "It is not the time for decision-making." Referring to the next formal OPEC meeting in Vienna on Nov. 30, he added: "We will try to reach agreement for November."

The Organization of the Petroleum Exporting Countries will hold informal talks at 1400 GMT on Wednesday. Its members are also meeting non-OPEC producers on the sidelines of the International Energy Forum, which groups producers and consumers.

Oil prices LCOc1 have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels.

A deal has also been complicated by acute political rivalry between Iran and Saudi Arabia, which are fighting several proxy-wars in the Middle East, including in Syria and Yemen.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh's position as the kingdom had previously refused to discuss output cuts.   Continued...

 
Saudi Energy Minister Khalid al-Falih talks to reporters during the 15th International Energy Forum Ministerial (IEF15) in Algiers, Algeria  September 27, 2016. REUTERS/Ramzi Boudina