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Oil output freeze deal now seen more likely in November

Saudia Arabia has softened its stance on Iran pumping more oil, but an OPEC deal to freeze output remains elusive.

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Oil output freeze deal now seen more likely in November

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Major oil producers have again been discussing freezing output to push up prices.

Point of view

There is no offer, just consultation, trying to figure out where the market is going and get to a consensus view

Khalid al-Falih Saudi Energy Minister

They are using the occasion of the International Energy Forum in Algeria – which brings together producers and consumers – for informal talks about the oversupply of crude.

Iran is still insisting it should be allowed to pump more to bring its output back to the levels that predated international sanctions.

Iran’s oil minister Bijan Namdar Zanganeh was giving little away when he spoke to the media. He said he was there for “a consultative, informal meeting, in the hope of changing people’s views”.

Asked about the mood he said: “It’s not my mission to be optimistic or pessimistic.”

No agreement is expected in Algiers, but Saudia Arabia has signaled it could compromise with Iran, as well as Nigeria and Libya, which have economic reasons to keep pumping “at maximum levels that make sense” as Saudi Energy Minister Khalid al-Falih characterised it.

Saudia Arabia has previously said it would reduce output only if every other OPEC and non-OPEC producer followed suit.

Al-Falih told reporters: “There is no offer, there is just consultation, trying to figure out where the market is going and to get to a consensus view. That will happen in due course, and the mood is generally very positive.”

Also on hand is the Russian Energy Minister Alexander Novak, who is said to be mediating between the Saudis and Iranians, helping them inch towards a possible agreement to freeze production at the next formal OPEC meeting, in November.

Vyanne Lai, oil analyst at National Australia Bank in Melbourne, said: “I think OPEC producers realise they can’t continue to expand production indefinitely – OPEC producers are close to maximum capacity – so there could be room for a deal (in November).”

As the discussions continued in Algiers, Brent crude was trading around $46 a barrel on Wednesday.