Gulf OPEC members seek to revive global oil output deal

VIENNA (REUTERS) - Gulf OPEC members including Saudi Arabia are looking to revive the idea of coordinated oil-output action by major producers when the group meets on Thursday (Jun 2), senior OPEC source said, but Iran signalled the country was not ready for any such pact. "The Gulf Cooperation Council is looking for coordinated action at the meeting," the source said, referring to a group combining OPEC's biggest producer Saudi Arabia and its Gulf allies Qatar, Kuwait and the United Arab Emirates.

Saudi Arabia effectively scuppered plans for a global production freeze - aimed at stabilising oil markets - in April. It said then that it would join the deal, which would also have involved non-OPEC Russia, only if Iran agreed to freeze output.

Teheran has been the main stumbling block for the Organisation of the Petroleum Exporting Countries to agree on output policy over the past year as the country boosted supplies despite calls from other members for a production freeze.

Teheran argues it should be allowed to raise production to levels seen before the impostion of now-ended Western sanctions over Iran's nuclear programme.

At its previous meeting in December 2015, OPEC failed to set any production policy including a formal output ceiling, effectively allowing its 13 members to pump at will in an already oversupplied market.

As a result, prices crashed to US$27 (S$37.2) per barrel in January, their lowest in over a decade, but have since recovered to around US$50 due to global supply outages.

Those include declining output from US shale producers badly hit by low prices but also forest fires in Canada, militant attacks on pipelines in OPEC member Nigeria and declining output in Venezuela, also a member of the group.

On Wednesday, oil traded 1 per cent lower at around US$49 per barrel on market pessimism over whether OPEC could cut a meaningful agreement on Thursday. "The main story today is the one of declining output. The market is getting more pessimistic not only about non-OPEC but also about OPEC supply. Global demand is still growing strongly and that works in OPEC's favour," said Gary Ross, a veteran OPEC watcher and founder of U.S.-based PIRA consultancy.