Saudi Arabia won’t restrain its oil production unless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha, the kingdom’s deputy crown prince said.

The world’s biggest crude exporter would cap its market share at about 10.3 million to 10.4 million barrels a day, if producers agree to the freeze, Prince Mohammed bin Salman said during an interview on Thursday at King Salman’s private farm in Diriyah, the original home of the Al Saud royal family.

“If all major producers don’t freeze production, we will not freeze production,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force. “If we don’t freeze, then we will sell at any opportunity we get.”

At least 15 nations including Saudi Arabia and Russia, the world’s two largest crude oil producers, will gather in Doha on April 17 to discuss freezing output to stabilize an oversupplied market. Prince Mohammed has said Saudi Arabia’s commitment to a production cap would depend on Iran’s participation. Iran’s oil minister has dismissed the prospect of joining the deal as “ridiculous” for now.

Russian Outlook

A Russian official said it was possible to reach a deal in Doha to freeze oil output, regardless of Iran whose crude shipments have risen by more than 600,000 barrels a day this month. That increase has added to the pressure on producer nations to reach an agreement to prop up prices as economies from Venezuela to Nigeria reel from the market rout.

The meeting in Doha is only relevant if no deal is reached, prompting a sharp selloff in the markets, according to Ed Morse, head of commodities research at Citigroup Inc.

The credit ratings of more than 10 oil-producing nations in the developing world were placed on review in March for a downgrade by Moody’s Investors Service, which cited the shock of depressed prices on these economies. The list includes Russia, Kazakhstan, Nigeria, Angola, Gabon and five of the six Gulf Cooperation Council nations -- Kuwait, Saudi Arabia, the United Arab Emirates, Bahrain, and Qatar, according to Moody’s.

Saudi Arabia’s creditworthiness was downgraded at Fitch Ratings after the plunge in oil prices. The kingdom’s rating was lowered one level to AA-, the fourth-highest investment grade, the ratings company said on Tuesday. It maintained a negative outlook for the credit, signaling the possibility of more downgrades.

Others’ Battle

“If prices went up to $60 or $70, that would be a strong factor to push forward the wheel of development,” Prince Mohammed said. “But this battle is not my battle. It’s the battle of others who are suffering from low oil prices.”

Prince Mohammed also said that Saudi Arabia isn’t concerned because “we have our own programs that don’t need high oil prices.”

Brent crude settled at $43.10 a barrel Friday in London, having rebounded by more than 50 percent from a 12-year low in January.

After the Organization 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 10.5 million barrels a day, saying that customers were asking for more crude.

Preliminary Deal

The meeting of oil producers in Doha on Sunday 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.

“There is hope” that producers will reach an agreement in Doha, Dmitry Peskov, the Kremlin’s press secretary, said following the latest conversation between Russian Energy Minister Alexander Novak and his Saudi counterpart. Novak spoke to Saudi Oil Minister Ali al-Naimi by phone on Tuesday to discuss prospects for a production freeze, a person with direct knowledge of the matter said.

When OPEC reaches a collective consensus, “I will support them,” Prince Mohammed said.

Source:
courtesy of BLOOMBERG

by Wael Mahdi and Glen Carey

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