The world’s second-largest oil producer Saudi Arabia has proposed that all oil-producing countries, OPEC and non-OPEC countries, cut production by 5 percent in a bid to boost declining oil prices in a sign that the Saudis are feeling the backlash of low oil prices, the Russian government said Thursday.
Advertisement
NEW YORK-Oil prices surged Thursday on comments from Russia’s energy minister that the country is willing to meet with members of the Organization of the Petroleum Exporting Countries to discuss production cuts.
Oil has pared its decline this year to about 9% after earlier plunging to a 12-year low as volatility in global markets added to concern over brimming US stockpiles and rising exports from Iran after the removal of sanctions.
Finally, Reuters suggested that “it is too early” to determine if OPEC members can reach any agreement to cut production. It settled the previous session up 85 cents, a 2.7 per cent gain.
UPDATE: Bloomberg posted a headline shortly at 10:35 a.m. EST that said OPEC Gulf Reps Saying Saudi’s Have No Proposal To Cut Output By 5%.
Short covering, which has been a major factor in oil’s recovery from last week’s lows, also pushed prices up.
“The fact that the bigger oil producers are talking in these terms is limiting the downside”, Michael Hewson, chief market analyst at CMC Markets, said.
Russian Federation holds regular discussions with various countries, including oil-producing ones, on the situation on oil markets but there are no plans as of now for coordinated actions, the Kremlin’s spokesman said on Wednesday.
He also told reporters that there was a proposal for a meeting between OPEC and non-OPEC countries at the level of oil ministers and that Russian Federation was ready for the meeting.
A spokesperson for Russia’s energy minister told CNN there is no formal date for the meeting or an official invitation yet.
Washington described Novak’s statement as showing Russia’s “economic weakness”, after the ex-Soviet country lost billions in oil revenues due to sinking prices.
Market participants reckon a much more modest cut to Opec group output in coordination with Russian Federation would be enough to change the bearish sentiment of oil traders.
Advertisement
Al-Saadoun’s comments come the same week as Khalid Al-Falih, chairman of the kingdom’s state oil producer Saudi Arabian Oil Co, said the company is spending as much now as it did before the price collapse and maintaining investments in oil and natural gas projects.
