Saudi Arabia has offered to reduce oil production, if rival, Iran, agrees to cap its output at the current level of 3.6mb/d. This is a major compromise from the Kingdom ahead of production freeze talks in Algeria by the end of September, reported World Oil.
The offer, which has yet to be accepted or rejected by Tehran, was made in September, although Saudi Arabia did not specify how much they’d be willing to reduce oil output, according to The International News. The first attempt at a global production pact collapsed in April when Riyadh insisted Tehran participate. However, Iran said it will not join any such agreement until it regains market share and boosts output to pre-sanctions levels of around 4mb/d.
The Saudi proposal can be seen as a shift by Riyadh, which orchestrated the current OPEC policy in 2014 by refusing to cut output alone to support prices and choose to defend market share against rivals, particularly high-cost producers.
In related news, global oil prices remain below $50 per barrel, less than half the level of 2014 which reached as high as $115 per barrel. The International Energy Agency is predicting the surplus could persist for a fourth year into late 2017. This comes as OPEC members plan to meet on the sidelines of the International Energy Forum in Algeria late September to discuss possible production freeze to return balance to global market.