Saudi sees ‘no sense’ in oil production cuts

Ali al-Naimi, Saudi Arabia’s oil minister, says cutting production levels does not make sense, while Iran insists that freezing output is a joke.

Last week, Saudi Arabia and Russia agreed to freeze output at January 2016 production levels, urging Iran to join in on the deal.

Iran has, however, called the plan a “joke”, wondering how Saudi could be producing 10 million barrels yet asking Iran to produce one million barrels per day.

“This is more like a joke that they tell us they would freeze their production above 10 million barrels per day and that we should also in turn freeze our production at one million,” Bijan Zangeneh, Iranian oil minister, said on Tuesday.

While Iran initially said it supported the output freeze, its new position suggests the country has no desire to freeze its output and asked Saudi Arabia to cut production.

Speaking through its oil minister, Saudi in turn said: “there is no sense in wasting our time seeking production cuts. Not many countries are going to deliver, even if they say they will cut production they are not going to deliver.”

According to CNN, al-Naimi said there is “no trust” between oil producers and then later clarified that there is “less trust than normal”.

Iran’s mocking of the oil freeze came at the same time as the top Saudi oil official was in the US saying “the freeze is the beginning of a process”.

“Maybe not all of them, but most of the countries that count will freeze,” al-Naimi said speech on Tuesday at the IHS CERAWeek oil conference in Houston.

The latest infighting within OPEC dashed hopes on Wall Street that oil countries would ease the epic supply glut crashing the oil market. Oil plunged 5% to $31.75 a barrel following the Iranian official’s comments.

President Muhammadu Buhari’s trip to Saudi Arabia and Qatar may have suffered a little set back with the tussle between Saudi and Iran.

Following the comments, OPEC daily basket price stood at $28.94 a barrel, Tuesday, compared with $29.48 the previous day.