Saudi oil minister touts output freeze, rules out cut

Saudi Arabia’s oil minister Ali al-Naimi said he hoped additional producers would join a potential deal to freeze output next month

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Saudi Arabia’s oil minister Ali al-Naimi said Tuesday he hoped additional producers would join a potential deal to freeze output next month, saying it could help address a global glut.

But Naimi again ruled out a cut in output that many had hoped for to shore up crude prices.

“Freeze is the beginning of a process,” Naimi said at a Houston energy conference. “That means if we can get all the major producers to agree not to add additional barrels, then this high inventory we have now will probably decline in due time.”

“It’s going to take time.”

Naimi’s comments helped press crude prices lower. Near 1730 GMT, US benchmark West Texas Intermediate dropped $1.69 to $31.70 a barrel, while the London standard, Brent crude, was down $1.41 to $33.28.

At a meeting last week, Saudi Arabia, Russia, Qatar and Venezuela agreed to freeze output at January levels on condition that other major producers followed suit.

“We had one meeting, four countries agreed,” Naimi said. “We sent emissaries to other countries. There is a lot of talk, and hopefully sometime in March, there will be another meeting and probably gather more agreements on freezing.”

Naimi said freezing output was more realistic than cutting because “not many countries are going to deliver, even if they say they will cut production.”

“There is a common sense and there is a need for more money, and I think those two things will cause, maybe not all of the countries, but most of the countries that count to freeze,” including Iran, Naimi said.

But in Iran, oil minister Bijan Zanganeh on Tuesday dismissed an output freeze as “a joke”, the ISNA news agency reported.

“Some neighbouring countries have increased their production over the years to 10 million barrels per day and export this amount, then say let’s all freeze our oil production,” Zanganeh said.

“They freeze production at 10 million bpd and we freeze at 1 million bpd. This is a very funny joke.”

Iran has increased production since a deal with Western powers ended sanctions over its controversial nuclear program.

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