Saudis Said To Offer Oil Production Cut If Iran Freezes Output, Reuters Reports

Tyler Durden's picture

With oil rolling over, and modestly pressuring US equity futures, moments ago Reuters did what it does best, and reported, citing three "anonymous" sources, that Saudi Arabia was prepared to engage in a radical shift in its long-held policy of not cutting production, and has offered to lower its own oil production if 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."

Reuters adds that "the offer, which has yet to be accepted or rejected by Tehran, was made this month, the sources told Reuters on condition of anonymity" and notes that 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.

As Reuters further adds, the first source did not say by how much Riyadh would cut if Iran agreed to freeze at 3.6 million bpd, which has been the OPEC nation's output for the past three months.Riyadh's production has spiked since June due to summer demand, reaching a record high in July of 10.67 million bpd and edging down to 10.63 million bpd in August. From January to May, Saudi Arabia produced around 10.2 million bpd.

Two sources said Saudi Arabia's Gulf OPEC allies the United Arab Emirates, Qatar and Kuwait were expected to contribute to any reduction if an agreement were reached.

According to UBS oil analyst Giovanni Staunovo; “the answer from Iran is still pending, so there is no agreement yet,” adding that “considering where Saudi production stands, it’s a smart move to say they’re willing to cut production.”

Needless to say, if accurate, this would mean that Saudi Arabia is prepared to throw in the towel on its strategy first unveiled almost two years ago, in the November 2014 OPEC meeting.

The report took place moments after Bloomberg reported that OPEC delegates from Saudi Arabia and Iran ended oil-production discussions after 2-day meeting in Vienna. As a reminder, as of yesterday evening, Saudis and Iranians hadn’t reached an agreement, and yet Reuters wants oil-trading algos to believe that the production cut proposal had been floated well before the Vienna preparatory meeting.

We expect this latest attempt to manipulate the price of oil higher to fizzle shortly, whether with an official denial, by Iran rejecting the "offer" or otherwise, but for the time being WTI spiked higher by 80 cents on the news, and after dipping in earlier trading is now green, trading at $46.40 at last check.

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LadiesLoveCoolJames's picture

Ahh, at least we had one "market" that was free for just a little while. Back to the usual manipulated bullshit that infects everything from cheese to stocks and bonds. Party on earthquake makers!

y3maxx's picture

OT--Stock Market crash scenario

--With Wall Street so solidly behind Clinton....A stock market crash is a likely scenario going into the Nov 8 voting to scare American citizens into voting for Clinton and the status quo and against Trump.



NoDebt's picture

Buy the rumor, sell the.... next rumor that negates the first rumor.

Lather, rinse, pull your hair out.


cheka's picture

artificial scarcity

hence the need for a cartel.  what ever happened to peak pumpers? 

back to basics's picture

To be fair, they weren't factoring in the biggest economic showdown the world has ever seen. It's the demand side of the equation that blew up. 

AlaricBalth's picture

"Hey Muhammad. Place an order to buy a thousand crude contracts. My uncle Mussafa is announcing another bogus oil production cut. Stupid Americans think we have the same relevance as we did 25 years ago."

GreatUncle's picture

Looks like Iran has a bargaining chip ... tell Saudi to cease hostilities else better to grind Saudi strength = oil into the sand so to speak.


Stu Elsample's picture

another good use for oil is boiling traitors

WTFUD's picture

IRAN to Wahhabi Sauds - SOD OFF

Last of the Middle Class's picture

Reuters starting another pump and dump rumor for their masters?

onmail1's picture

Call to the devil


Oillah Hoo A-kabar

(Oil devil , come out of your grave)

Wuhammed-ur-ra$ool oillah

(And Wuhammed-representsTheOilDevil)


Petroleum & gas are the dead bodies of ancient creatures.

And brahmic religions say that the dead shall come out of their grave & then there will be judgement day.(nuclear war due to oil)

The oil demon will lead the world into nuclear world war 3 endangeing the entire planet




Arnold's picture

Generally cost of crude to tanker is this:

Iran $10

Saudi $30

US $80

Too general to be of trading use, but the proportions are close.

SillySalesmanQuestion's picture

No markets left, just fraudkets....WABOB.

CRM114's picture

"Iran has to agree to freeze"


They might as well ask for the Ayatollah to f#ck a goat on live TV.

This is not news. Nothing will happen. We all know nothing is going to happen.

In two days, the Saudis and Iranians won't even have agreed on which brand of bottled water is on the table.

LadiesLoveCoolJames's picture

And oil will rise $5 on the rumor and only fall back $2 on the non-event.
Mission Accomplished!

Sky flyer's picture

+1000 for that comment crm114.

CRM114's picture

You're very kind.

What I find beyond disappointing, scandalous even, is that I haven't seen a single business reporter or analyst say the same. Are they really all that geopolitically stupid, or is it just another pathetic effort at keeping the markets moving?


Update: At least one analyst is prepared to call Reuters a bunch of rumour-mongers, see later article on the home page. It's still pathetic how most of them don't however. And that they give structural reasons, rather than the facts that they hate each other, the Suadis are going bust, and Iran is deperate for foreign currency.

cart00ner's picture

Say-Do, 2 dif things... Holding my breath.

Sky flyer's picture

Thank god for this rumor. For a moment I thought stocks may open in the red.

Cluster_Frak's picture

Good fucking luck. Iran will pump as they need to ramp up and shore up their budget after years of idiotic sanctions brought by US oil producing competitors. There was a fair share of smuggling of Iran oil via Azerbaijan, but I would not know anything about it.