ALGIERS (REUTERS) - Saudi Arabia on Tuesday dashed hopes that Opec oil producers could clinch an output-limiting deal in Algeria this week as sources within the exporter group said the differences between the kingdom and rival Iran remained too wide.

"This is a consultative meeting. We will consult with everyone else, we will hear the views, we will hear the secretariat of Opec and also hear from consumers," Saudi Energy Minister Khalid al-Falih told reporters.

The Organisation of the Petroleum Exporting Countries (Opec) will hold informal talks at 1400 GMT (10pm Singapore time) on Wednesday. Its members are also meeting non-Opec producers such as Russia on the sidelines of the International Energy Forum, which groups producers and consumers.

Oil prices have more than halved from 2014 levels due to oversupply, prompting Opec producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to freeze output levels, although market watchers have said such a move would fail to reduce unwanted barrels.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh's position as the kingdom had previously refused to discuss output cuts.

On Monday, Iranian Oil Minister Bijan Zanganeh said expectations should be modest and several Opec delegates said the positions of Saudi Arabia and Iran remained too far apart. Oil prices were down more than 1 per cent in Tuesday trade.

Three Opec sources said Iran, whose production has stagnated at 3.6 million barrels per day, insisted on having the right to ramp that up to around 4.1-4.2 million bpd, while Opec Gulf members wanted its output to be frozen below 4 million. "Don't expect anything unless Iran suddenly changes its mind and agrees to a freeze. But I don't think they will," an Opec source familiar with discussions said.