Russia’s Energy Minister Alexander Novak described the announcement as marking a “new era” in cooperation between Russian Federation and Saudi Arabia and insisted it would have a “critical significance” for oil markets.
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Brent crude futures for November delivery were last up US$1.93 per barrel at US$48.75 a barrel at 0945 GMT and U.S. crude for October delivery was up US$1.60 a barrel at a session high of US$46 a barrel.
Russian cooperation is vital to the success of any production freeze because it produces over 10% of the world’s oil.
An Iranian official said Monday that the country still planned to reach its output targets, regardless of the Saudi-Russia agreement.
Despite their differing views, Mr Novak said he favoured choosing a month from the second half of this year that would be the benchmark for a production freeze.
He added that the UAE believes in the commitment of both the Saudi Arabia and Russian Federation, major oil producers, to working together and with others to achieve oil market stability.
At the G20, Russia’s President Vladimir Putin also weighed in on the issue backing Iran’s desire to pump as much oil as it did before worldwide sanctions were imposed on it.
Iran argues that it needs to regain market share lost during years of Western sanctions, which were lifted in January. Bin Salman underlined that cooperation between the two countries may lead to solid results with respect to developments on the oil market.
“The two countries have pledged to set up a working group, along with other measures aimed at supporting a market that has been rocked by an epic price collapse since 2014”.
Comments from Indonesian finance minister Sri Mulyani Indrawati that she was “comfortable” with crude prices at $40-$45 a barrel, have also added pressure on the commodity.
Iran, which is raising exports after the lifting of Western sanctions in January, refused to participate in the earlier effort to freeze output.
Away from the oil market, precious metals headed higher after disappointing USA non-farm payroll (NFP) data saw the immediate risk of a United States interest rate hike recede.
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“U.S. crude stockpiles have risen while OPEC heavyweights such as Saudi Arabia and Iraq continue to pump incessantly into a market that is already heavily saturated”, said analyst Lukman Otunuga at traders FXTM. “What is the point of meeting in Algiers?” said one OPEC delegate from a region outside the Persian Gulf. Russia’s energy minister Alexander Novak, for his part, promised a “historic” declaration. Novak said outright oil production cuts may also be discussed in Algeria.
