Saudis Say To Take Big Hit On Oil Output For OPEC Deal, Iran Can Freeze

Saudis Say To Take Big Hit On Oil Output For OPEC Deal, Iran Can Freeze
Saudi Energy Minister Khalid al-Falih says OPEC is close to clinching a deal to limit oil output.

The September deal was seen as a victory for Iran. Tehran has long argued it wants to raise production to regain market share lost under Western sanctions, when Saudi Arabia increased output.

In recent weeks, Riyadh changed its stance and offered to cut its output by 0.5 million bpd, according to OPEC sources, while suggesting Iran limit production at around 3.8 million bpd - in line with or slightly above the country's current output.

Tehran has sent mixed signals, saying it wanted to produce as much as 4.2 million bpd. Iran's letter to OPEC suggested Saudi Arabia should cut output to 9.5 million bpd.

Documents prepared for Wednesday's meeting propose the group cut production by 1.2 million bpd from October levels, but an OPEC source said ministers had begun debating a cut as high as 1.4 million bpd.

The source said that out of additional non-OPEC cuts of 0.6 million bpd, OPEC expected Russia to cut by 0.4 million. A Russian ministry source said the figure was "a bit excessive".

Venezuelan Oil Minister Eulogio Del Pino said on Wednesday he hoped an agreement between OPEC and non-OPEC would "take out of the market between 1.8 and 2.0 million bpd".

OPEC member Iraq has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State, but Del Pino said Iraq would contribute to cuts.

Iran and Iraq together produce over 8 million bpd, only slightly behind long-time leader Saudi with 10.5 million bpd.

The argument between Iraq and Saudi Arabia mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

"If you get this deal done, it would be huge. You remove a lot of oil from the market and you get the Russian participation," said veteran OPEC watcher and founder of Pira consultancy Gary Ross.

(Additional reporting by Vladimir Soldatkin, Shadia Nasralla and Lisa Barrington; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)


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