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Kuwait and Saudi Arabia are still negotiating the restart of oil production at jointly owned fields in the so-called Neutral Zone between the two countries, Kuwaiti Deputy Foreign Minister Khaled al-Jarallah told media on Saturday, as quoted by Reuters.
“When the final deal about this zone is reached, the two countries will start discussing the resumption of the oil production,” al-Jarallah said.
An earlier Reuters story had mentioned reports in Kuwaiti media that said the agreement had been reached, as per unnamed sources close to the talks. A Bloomberg report also cited unnamed sources as saying Kuwait expected to sign the final agreement with Saudi Arabia soon, with production in the Neutral Zone to be restarted within a month or so.
Joint oil production in the neutral zone was suspended in 2015, but in September 2018 the Financial Times reported that the two countries were mulling over a restart amid rising oil prices and the matching rise in worry among large oil buyers.
The neutral zone, the FT reported at the time, could be pumping half a million barrels daily in a few months, according to the International Energy Agency, which would add to about 10 million bpd of Saudi production and around 3 million bpd on Kuwaiti production.
Related: Oil Prices Fall On Onslaught Of Bearish News
If production in the Neutral Zone is restored, this will necessitate cuts in both Saudi Arabia and Kuwait, one source told Reuters, as OPEC is still in a capped production mode to keep prices steady. There was even talk about deepening the cuts after OPEC’s next meeting, seeing as those are not going any higher.
Even so, the reports about the possibility of a field restart in the Neutral Zone were enough to pressure prices. At the time of writing, Brent crude was trading at $59.18 a barrel and West Texas Intermediate was trading at $53.75, both down from Friday.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.