Saudi reports boost OPEC cut hopes

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Reports that Saudia Arabia may be willing to rein in crude production if Iran does the same are buoying hopes of a deal to cut output at next week’s OPEC meeting. Ciara Lee reports.

Saudi reports boost OPEC cut hopes

Oil prices might be about to get a boost.

Ministers from the OPEC cartel of producer nations meeting in Algeria next week.

Russia will be there too.

And there’s growing talk of a deal to cut production to boost prices.

(SOUNDBITE) (English) REUTERS CHIEF OIL AND GAS SPECIALIST IN EUROPE, DMITRY ZHDANNIKOV SAYING:

“The reason why we and sources are telling us chances are increasing, is simply because most producers, including Saudi Arabia, the biggest producer in OPEC, and Iraq and Iran and non-OPEC Russia, they’ve all pretty much reached their peak production capacity so it’s very difficult for them to push output any further and so the situation for a compromise is slightly better than a few months ago.”

But oil market veterans aren’t holding their breath.

OPEC often discusses production cuts, and rarely delivers.

Even when it agrees a deal, members have a habit of reneging.

Domestic politics could also get in the way:

(SOUNDBITE) (English) REUTERS CHIEF OIL AND GAS SPECIALIST IN EUROPE, DMITRY ZHDANNIKOV SAYING:

“An oil minister cannot travel back to his home country and report to his government that he cut a deal that will be perceived as a weak deal at home, so he needs to present it as some sort of victory.”

Iran may hold the key.

It’s only just returned to international markets after sanctions were lifted.

Tehran has been busy ramping up output, not cutting it.

Now Reuters sources say Saudi Arabia might cut production if Iran will at least stop increasing.

But both sides will need a deal that makes them look like the victor.

Tags : Hopes, Opec, boost, Reports, saudi

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