Sept 23 (Reuters) - Saudi Arabia has offered to lower its own oil production if rival Iran agrees to cap its output this year, in a major compromise ahead of talks in Algeria next week, three sources familiar with the discussions told Reuters. The offer, which has yet to be accepted or rejected by Tehran, was made this month, the sources told Reuters on condition of anonymity. Riyadh is ready to cut output to lower levels seen early this year in exchange for Iran freezing production at the current level, which is 3.6 million barrels per day, the sources said. "They (the Saudis) are ready for a cut but Iran has to agree to freeze," one source said.
With regards to the Reuters article above which was published earlier today, getting Iran to agree to freeze its own production at their present level will likely be at tough sell especially bearing in mind recent official Iranian comments on the matter, on the other hand it’s unlikely they can produce much more than 4mio bpd in the near term anyway without substantial upgrades to their infrastructure, they also are still struggling to attract overseas financing and expertise to do so, due to concerns by banks and companies over the ongoing lack clarity on the remaining US financial sanctions. So there may just be a possibility of an temporary agreement on this for a fixed period of time, (eg : 6mths to 1 year).
Once we hear more on this subject we will update you,
Executive Director & Geopolitical Analyst
Middle East & Africa