Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilising the over-supplied global crude market.
The warning by Mohammed bin Salman, 30, who has emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between Opec and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.
“If all countries agree to freeze production, we’re ready,” bin Salman said in an interview.
“If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door,” he said. In London, Brent crude oil fell below $40 a barrel after his comments, declining as much as 2.1% to $39.50 a barrel at one stage.
In New York, West Texas Intermediate crude fell as low as $37.42 a barrel, almost erasing all its gains for the year.
After the Organisation of Petroleum Exporting Countries abandoned its efforts to boost oil prices in November 2014, focusing instead on protecting its market share, Saudi Arabia increased production to an all-time high of more than 10.5m barrels a day, claiming that customers were asking for more oil.
The meeting of oil producers in Qatar on April 17 follows a gathering in February between Saudi Arabia, Qatar, Russia, and Venezuela in which the quartet tentatively agreed to cap their production at January’s level. The deal, which helped to lift the price of benchmark Brent crude above $40 a barrel from a 12-year low of $27.10 a barrel in January, was contingent on other countries joining it.
Iranian oil minister Bijan Namdar Zanganeh will attend the Doha discussions but won’t join a production freeze, according to a person familiar with the nation’s policy. Tehran will maintain its policy of regaining market share lost during years of sanctions, said the source.
The International Energy Agency said that Iran, in its first full month freed of nuclear sanctions in February, lifted its oil production to a four-year high of 3.22m barrels a day.
Energy Aspects, a London-based consultant, said Iran boosted oil exports by another 100,000 barrels a day in March.
The latest comments from Riyadh mean the Doha meeting was “looking more and more pointless,” said Abhishek Deshpande, oil analyst at Natixis in London. “What is becoming very clear is that Saudi Arabia is serious about moving away from the traditional play of adjusting prices by cutting or freezing supplies by itself,” he said.