Kuwait, Saudi said to be close to restarting oil production in Neutral Zone

Kuwait and Saudi Arabia are reportedly close to restarting oil production at the disputed Neutral Zone following US intervention.

The news comes after hope that production in the territory would restart was quashed at the end of September when no deal was announced following a visit to Kuwait by Saudi Arabia’s Crown Prince Mohammed bin Salman.

Read: Pictures: Saudi crown prince makes brief visit to Kuwait

The Wall Street Journal cited oil sources as confirming progress had been made in talks between the two sides as the US seeks to phase out exemptions offered to some countries to buy Iranian crude after introducing new sanctions.

Read: As US sanctions against Iran return, major oil buyers get waivers

Kuwait previously indicated it was preparing to restart oilfields in the zone in late 2016 after production was halted at the Khafji and Wafra fields in October 2014 and May 2015 respectively due to environmental concerns and technical difficulties.

The closure has cost Kuwait up to $10bn, according to parliamentary figures based on forecasts that oil from Khafji had moved to the Al-Safaniya field in Saudi territory.

Before its closure Khafji, operated by Kuwait Gulf Oil Company and a Saudi Aramco subsidiary, was producing between 280,000 and 300,000 barrels per day, according to Reuters.

The Wafra field has an output capacity of about 220,000bpd of Arabian Heavy crude. US oil major Chevron previously operated the field on behalf of the Saudi government

Read: Kuwait, Saudi to resume oil production in neutral zone by year-end – report

The sources told the Wall Street Journal that production could restart in the first quarter of 2019 if a deal is reached.