Oil Prices and News

Saudi Arabia will cooperate on oil output, didn't propose production cut, says Arabiya

CNBC with Reuters
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Saudi Arabia wants to cooperate with other oil producers to support the oil market, Saudi-owned Al Arabiya television reported on Sunday, quoting an unnamed Saudi source.

The source also told the Dubai-based satellite channel that the kingdom was not the source of a proposal to cut production that Russia was studying.

Russia said on Thursday that OPEC had proposed oil production cuts of up to 5 percent in what would be the first global deal in over a decade to help reduce a glut of crude and prop up sinking prices.

Russian Energy Minister Alexander Novak also told reporters that there was a proposal of a meeting between Organization of the Petroleum Exporting Countries (OPEC) members and non-OPEC countries, and that Russia was ready for the meeting.

So far, OPEC powerhouse Saudi Arabia has withstood pressure from other cartel members to cut output, instead sticking to a strategy of allowing the price of oil to drop to levels that were likely to force rivals such as U.S. shale producers out of business. The prospect that Saudi Arabia could relent helped oil prices rebounding on Friday, gaining more than 25 percent on the 12-year lows hit earlier in the month.

Brent futures for March, which expired on Friday, closed at $34.74 a barrel, 85 cents or 2.5 percent higher. On Jan. 20, it hit $27.10, its lowest since November 2003. U.S. crude settled up 40 cents or 1.2 percent, at $33.62 per barrel, having hit a high of $34.40 in the session.

Saudi Arabia's stock market rose sharply in early trade on Sunday, led by petrochemical companies, after oil prices climbed at the end of last week.

But experts were skeptical of Russia's claims and a number of media outlets reported denials from unnamed Saudi sources that the crude giant was the source of the proposal to slice 5 percent from production levels.

Arabiya reported on Saturday that it was Venezuela that had proposed a February meeting of oil producers to discuss steps to prop up prices. Arabiya also reported that another oil producer, Iraq, would accept a decision by OPEC and non-OPEC members to cut output.

"Iraq will agree and cooperate if producers really want to cooperate to cut," Adel Abdul Mahdi told reporters in Baghdad, according to Arabiya.

Meanwhile, Reuters reported that a senior Iranian oil official told Shana, the Iran oil ministry's news agency, that the country aimed to boost crude oil production capacity by 160,000 barrels a day once it had completed expansion projects at two oilfields.

Abdolreza Haji-Hosseinnejad, head of Iran's Petroleum Engineering and Development Company, said that the North Azadegan and Yadavaran oilfields were operational and would official open after Feb. 26 parliamentary elections.

The prospect that Iran would begin exporting oil once it was no longer subject to international sanctions had long weighed on oil prices.

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