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Saudi to cut oil production deal with or without Iran, says report

Saudi Arabia would join other producers in cutting oil output even if Iran does not join the agreement, the Financial Times has reported.24 Mar 2016

Oil producing nations are due to meet next month to discuss a cut in production, following a provisional agreement between Saudi Arabia, Russia, Qatar and Venezuela last month. The countries are likely to agree to a freeze, a senior Opec delegate told the Financial Times.

"There is agreement from many countries to go along with a freeze," the delegate told the newspaper. "Why make it contingent on Iran?"

Discussions on a freeze have already bolstered the oil price, the delegate told the newspaper: "Look at what it [the move towards the oil freeze] did to change the psyche of the market … Now the market can see people are gathering, people are communicating. This collaborative element has helped the price."

Abdalla El-Badri, Opec secretary-general, told the Financial Times that "maybe in the future [Iran] will join the group. They have some conditions about their production".

Iran welcomed February's deal between Saudi Arabia and Russia, but made no commitment to cutting its own production.

"I hope that with the efforts which have been initiated, we would witness improvement of the market’s situation in future … This is the initial step and we have to look at it positively. But I think everybody agrees that we have to monitor the market situation and reaction and to consult on the next steps if necessary," Iranian minister of petroleum Bijan Zangeneh said.

The International Energy Agency (IEA) said in January that Iran plans to boost its output by an immediate 500,000 barrels per day. This could lead to the market "drown[ing] in oversupply" this year, keeping prices low, it said.