Oil slumps as Iran-Saudi discord dims freeze prospects

[ALGIERS, Algeria] Iran on Tuesday ruled out an imminent agreement with other major oil producers to freeze output as regional rivalry with Saudi Arabia hindered efforts to reverse a price slump.

The new signs of discord sent oil prices sliding again on world markets in the face of a global supply glut that has left a gaping hole in the finances of oil-exporting nations.

US benchmark West Texas Intermediate for delivery in November ended down US$1.26 at US$44.67 a barrel in New York trading on Tuesday.

In London, Brent North Sea crude for November shed US$1.38 to US$45.97 a barrel.

Opec kingpin Saudi Arabia has so far refused to curb its output at a time when Iran is ramping up production following the lifting of nuclear-related sanctions.

Iranian Oil Minister Bijan Zanganeh said Tuesday on the eve of an informal Opec meeting in Algeria that the Islamic republic was not yet ready to join a mooted production freeze.

"It's not in our agenda to reach an agreement in two days. We need time for more consultation," he told reporters on the sidelines of an energy conference in Algiers.

Mr Zanganeh said Iran wanted to increase its daily output to pre-sanctions levels of four million barrels, from the current estimated level of up to 3.8 million.

Saudi Arabia and Iran, the Middle East's foremost Shiite and Sunni Muslim powers, are at odds over an array of issues including the wars in Syria and Yemen.

But there were some tentative signs of a narrowing of differences in Algiers, where major non-Opec producer Russia will also join the talks on Wednesday.

Mr Zanganeh signalled that an agreement to stabilise oil prices could be struck at a November 30 meeting in Vienna of the Organisation of Petroleum Exporting Countries.

And Saudi Oil Minister Khaled al-Faleh said he was optimistic that ministers would find some common ground on Wednesday.

"I remain optimistic on the basis of market fundamentals that are moving in the right direction and also on the producers coming to a common view," he said.

Opec secretary-general Mohammed Barkindo, of Nigeria, suggested the remarks from Iran and other producers were "all part of the consultations".

Oil prices have more than halved since mid-2014 as a US shale oil boom prompted a fierce fight with Opec for market share.

A previous bid to freeze output fell apart in Doha in April as Iran refused to take part, saying it needed to return output to pre-sanctions levels.

But Mr Faleh said Tuesday that "the opinions of Opec and non-Opec states are beginning to converge".

"We will line up with the general opinion of the producers," he added.

Further complicating the negotiations, Libya and Nigeria are also reluctant to limit production after conflicts that have curbed their output.

Recession-plagued Nigeria, whose oil pipelines and installations have been repeatedly attacked by militants, said Tuesday that it wanted to be excluded from any production freeze.

"We need money," Oil Minister Emmanuel Ibe Kachikwu said.

Prices plunged from peaks of more than US$100 a barrel in mid-2014 to near 13-year lows below US$30 in January, before recovering some of the losses.

News last week that Saudi Arabia, Iran and Qatar had met in Vienna to discuss a Saudi offer to cut production provided Iran freezes its output had provided a boost to prices.

But that was before prices took another tumble on Tuesday on fading prospects of an agreement.

"Any hopes for a crude output freeze being agreed in Algiers this week have been dashed today after Saudi Arabia joined Iran in saying any talks on curbing output will be consultative," ETX Capital analyst Neil Wilson said.

Failure to agree on a production freeze could push prices even lower, Algerian Energy Minister Noureddine Boutarfa warned on Sunday.

"Every state in the organisation agrees on the need to stabilise prices, it just remains for us to find a format that pleases everyone," he said.

Venezuela's Oil Minister Eulogio del Pino said they were working on "several alternatives".

"Give us time to work on that consensus," he said.

AFP