Saudis could propose conditional production cuts
According to the report which cited an unnamed OPEC delegate, Riyadh would consider reducing output under certain conditions. The decision won’t be agreed during OPEC’s meeting on Friday where the group is to discuss its production policy.
One of the main conditions is for other producers like Russia, Mexico, Oman, Kazakhstan and Iran to cut their output. Iraq would have to freeze production at current levels or agree to leave the group, the report added.
“In order for there to be a cut in production non-OPEC must participate, Iraq has to participate and the Iran output picture has to be clear,” the delegate was cited as saying.
Iran’s envoy to OPEC, Mehdi Asali said on Wednesday that an OPEC majority wants to reduce crude oil production from the current more than 31 million barrels a day to spark a price recovery. However, he added, it was unlikely that Saudi Arabia and its allies would reduce output.
The group of 12 OPEC countries account for about 40 percent of the world’s crude production. Its output hit a three-year high in July, when the cartel pumped 31.5 million barrels per day (bpd). Despite the perpetual appeals to reduce output and support oil prices, OPEC has been refusing to do so as the organization is trying to maintain its market share. Saudi Arabia has been the main opposition to production cuts.
Oil prices have almost halved over the past 18 months as a result of a global supply glut. Prices recovered slightly on Thursday after the report of Saudi’s possible cut proposal. Brent futures for January were trading 58 cents higher, at $43.07 per barrel. The price for US crude benchmark West Texas Intermediate was up 41 cents at $40.35 per barrel at 9:50am GMT.