Iran, OPEC’s third-largest oil producer, said it won’t cut output as members of the exporter group met in Vienna before a crucial summit on Wednesday.
The country isn’t prepared to reduce supply, Oil Minister Bijan Namdar Zanganeh said in the Austrian capital. Saudi Arabia is insisting that Iran and its neighbor Iraq participate in a production deal. Benchmark Brent crude dropped as much as 4.4 percent in London.
Officials from the Organization of Petroleum Exporting Countries are holding discussions in an attempt to resolve differences that stand in the way of an agreement to cut oil supply as crude prices remain half their mid-2014 level. Iran and Iraq have continued to resist calls to cut, making the foundations for a deal look increasingly shaky.
Iran has suggested a deal whereby it freezes production at 3.975 million barrels a day, or about 200,000 barrels a day above current output, two OPEC delegates said Monday. Saudi Arabia countered with a proposal for Iran to cap output at 3.707 million a day. Algeria, acting as a go-between, offered an alternative that would see Iran freezing at 3.795 million a day, the delegates said.
An OPEC proposal initially agreed in Algiers in September would see producers trim output by about 1.2 million barrels a day from October levels. Iran has sought special treatment since it’s ramping up output following years of sanctions.