Oil prices slump after Saudi prince's 'production freeze' comments

Oil prices slump after Saudi prince's 'production freeze' comments
Black gold prices tank further after prospects worsen for a deal between Saudi and other oil-producing nations.
2 min read
02 April, 2016
With sanctions lifted on Iran, competition between oil producers has stepped up [AFP]
Oil prices have taken another hit after Saudi Arabia's deputy crown prince suggested that the kingdom would only freeze oil output if Iran and other major crude producers would follow suit.

"If all countries agree to freeze production, we're ready," Prince Mohammed bin Salman told Bloomberg.

"If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door."

The comments are seen as a direct challenge to Iran to actively involve itself in stabilising the price of crude oil, which is currently oversupplied.

While prices for the commodity experienced some recovery after speculation that oil-producing nations may strike a deal to address oversupply, indications that Riyadh is ready to stubbornly compete in production have worked to the opposite effect.

After the interview with the Saudi royal was published, oil prices dipped more than four percent in London and New York.

Read more: Saudi oil analysts hit back at Trump's 'boycott' remarks

The freezing of oil output is set to be on the agenda of a conference in Doha on 17 April, but Iran will not be among those attending.

Since sanctions were lifted on the Islamic Republic, increased Iranian oil production has posed additional challenges to those facing oil-dependent Saudi Arabia.

In his interview with Bloomberg, the Saudi monarch's son also revealed that that the oil-rich kingdom was planning an economic transformation to wean the country off its reliance on oil.

As part of this restructure, the kingdom has plans for a $2 trillion megafund that would be the largest sovereign wealth fund of its kind.

Bin Salman also revealed that limited shares in Aramco's parent company would also be sold off, a flotation which is set for 2018 - but could happen as early as 2017.