Qatar asking Iran, Iraq to freeze oil output at current levels

DOHA: Mohammed bin Saleh Al-Sada (C), Qatar’s Energy Minister and Seyed Mohammad Hossein Adeli (L), GECF Secretary General are seen during the 18th Ministerial Meeting of the Gas Exporting Countries Forum (GECF) in the capital Doha yesterday. — AFP DOHA: Mohammed bin Saleh Al-Sada (C), Qatar’s Energy Minister and Seyed Mohammad Hossein Adeli (L), GECF Secretary General are seen during the 18th Ministerial Meeting of the Gas Exporting Countries Forum (GECF) in the capital Doha yesterday. — AFP

RIYADH: Saudi Energy Minister Khalid Al-Falih said yesterday that OPEC should cut oil output to 32.5 million barrels per day (bpd), the lower end of a previously agreed range, to balance the market. Falih, speaking to Saudi-owned Al-Arabiya TV, said he was optimistic that the Organization of the Petroleum Exporting Countries would formalize a preliminary oil output deal reached in Algeria in September.

He said the oil market was on a path towards becoming balanced and that "reaching (a decision) to activate that ceiling of 32.5 million bpd will speed up the (market) recovery and will benefit producers and consumers".

Meanwhile, Qatar's Energy Minister Mohammed Al-Sada said yesterday that Iran and Iraq were being asked to freeze oil output at current levels as part of a wider deal to restrain production.

"We are discussing with both countries on that and we are looking at various ways and means of coming to a mutual understanding," Sada told reporters.

OPEC agreed in Algeria on Sept 28 to limit supply with special conditions given to Libya, Nigeria and Iran, whose output has been hit by wars and sanctions. The details are meant to be finalized when OPEC ministers meet in Vienna on Nov 30. Falih and other ministers have said previously that OPEC would reduce output to a range of 32.5-33.0 million bpd.

"I'm still optimistic that the consensus reached in Algeria for capping production will translate, God willing, into caps on states' levels and fair and balanced cuts among countries," Falih said. He said talks were ongoing with Qatar's Energy Minister Mohammed Al-Sada, who had invited him to Qatar to continue discussions.

A number of OPEC energy ministers are likely to meet informally in Doha today to try to build consensus over decisions taken by the full group in September in Algiers. Russia is ready to support OPEC's decision on an output freeze and sees a good chance that the oil producer group can agree terms by Nov 30, Russian Energy Minister Alexander Novak said on Wednesday.

Falih told Al-Arabiya that he hoped an agreement with Russia to cooperate on market stability would correspond with OPEC's meeting on Nov 30 in Vienna.

  Crude prices rise

Oil prices rose yesterday as expectations of an OPEC deal to limit production outweighed growing evidence of global oversupply and rising inventories, particularly in the United States.

Brent crude oil was up 60 cents a barrel at $47.23 by 1120 GMT. U.S. light crude was up 50 cents at $46.07. US crude inventories rose by 5.3 million barrels in the week to Nov. 11, well above forecasts of an increase of 1.5 million barrels, data from the U.S. Energy Information Administration showed on Wednesday.

Stocks are also rising elsewhere, thanks to record output by OPEC, which pumps around 40 percent of world oil supply. "The name of the game is 'volatility' as confusing signals are arriving before OPEC meets," said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.

"We have evidence of oversupply - US stocks rising - versus hopes for some action by OPEC."

Venezuelan President Nicolas Maduro said on Wednesday OPEC countries are ready to reach a "forceful" agreement on cutting oil output. Maduro met OPEC Secretary-General Mohammed Barkindo in Caracas to discuss a possible OPEC deal. Russia has also expressed willingness to support an OPEC decision to freeze output, Russian Energy Minister Alexander Novak said. But rising oil production and changing fundamentals "make a credible OPEC cut all the more difficult to achieve", Jason Gammel, analyst at US investment bank Jefferies, said.

"The physical market has shifted back to oversupply because of surging OPEC output, with the most material increases driven by improving security conditions in Libya and (tenuously) Nigeria," he said. Jefferies expects Brent to average $58 a barrel next year. - Reuters