12-04-2015, 12:52 AM
* Saudis would agree to OPEC output cuts of 1 million bpd -
report
* Iran says will not discuss any curbs on its output
* Iraq says maintains production plans
* Russia says sees no need to decrease production
(Adds Iraq, analysts, update prices)
By Shadia Nasralla and Alex Lawler
VIENNA, Dec 3 (Reuters) - Saudi Arabia appears to have
floated the idea of a global deal to balance oil markets and
lift prices from around the lowest levels in six years although
fellow producers Iran, Iraq and Russia on Thursday rejected its
main idea of cutting output.
Saudi Arabia, the largest oil producer in the Organization
of the Petroleum Exporting Countries (OPEC), might 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 slightly even though
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.
The proposal, if confirmed, would suggest Saudi Arabia is
looking to fine tune the approach it took last year when it
abandoned a policy of managing the market with large output cuts
in favour of pumping more and letting the market balance itself.
Any cooperation between OPEC and non-OPEC producers to
tackle low oil prices would be the first 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.
Russia, along with important OPEC member Iran which wants to
increase output after years of Western sanctions, looked
unVienna on Friday, with informal talks taking place on Thursday.
"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.
"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 programme, 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.
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 2.5 percent
to $43.58 by 1400 GMT, though traders said they were cautious.
Some banks, including Goldman Sachs, are predicting oil
could fall as low as $20 a barrel.likely to change position. OPEC will hold a policy meeting in
"I think it (the Saudi idea) is a pushing back against the
idea of 'lower for longer' prices," said Paul Horsnall from
Standard Chartered.
"And maybe someday we will find , that it wasn't really wasted time"