Iran rejected an offer from Saudi Arabia to limit its oil output in exchange for Riyadh cutting supply, dashing market hopes the two major OPEC producers would find a compromise this week to help ease a global excess of crude oil. Saudi Arabia’s energy minister said, however, that the mood at the International Energy Forum was generally positive as members of the Organization of the Petroleum Exporting Countries, OPEC, met in Algiers to discuss stabilizing oil markets.
An oversupply of oil has more than halved prices since 2014, and prompted OPEC ministers and non-member Russia to seek a market rebalancing. Yet differences between the two regional rivals Saudi Arabia and Iran remain. Saudi and Iranian economies depend heavily on oil, but Iran is seeing the pressure easing as it emerges from years of sanctions. Riyadh, on the other hand, faces a second year of record budget deficits and is being forced to cut the salaries of government employees. A deal has also been complicated by acute political rivalry between Iran and Saudi Arabia, which are fighting several proxy-wars in the Middle East, including in Syria and Yemen.