Oil hit a one-week high on Monday after Saudi Arabia and Russian Federation consented to coordinate on settling the oil market. “You can’t expect other countries to freeze while you reserve the right to increase your production”, Saudi Foreign Minister Adel al-Jubeir told reporters in London.
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While the energy ministers agreed that a production freeze would be the most effective way to support prices they failed to implement any specific short-term measures.
The price of Brent crude initially jumped by 5% but then fell to to stand 1.6% higher at $47.56 a barrel.
Prices later pulled back as Saudi Arabia ruled out the need to trim back production.
“Output freezing is one of the preferred possibilities but is not a necessity in the meantime”, said the Energy Minister.
In truth, they probably don’t need a task force to tell them, as they already know, that if global oil prices do rise, it won’t be long until output from swing producers such as USA shale drillers starts to flow back into the market.
Iran is ready to raise its output to 4 million barrels per day in a couple of months depending on market demand, a senior official from the National Iranian Oil Company said.
Russian Energy Minister Alexander Novak said Russia and Saudi Arabia were moving towards a strategic energy partnership and that a high level of trust would allow them to address global challenges.
Traders said United States crude was supported by Genscape data showing a draw of some 700,000 barrels last week at the Cushing, Oklahoma, delivery hub for USA crude futures. Traders said US crude was supported by Genscape data showing a draw of some 700,000 barrels last week at the Cushing, Oklahoma, delivery hub for USA crude futures.
In a statement published by OPEC, Iranian President Hassan Rouhani said it was “vital” for Iran to regain its pre-sanctions production levels even though his country supported any OPEC efforts to restore global price stability.
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A previous OPEC attempt to freeze output collapsed in April – three months after the nuclear deal came into effect – largely because of Iran’s refusal to join talks. “We consider a production freeze the most efficient tool, concrete parameters are being discussed at the moment”, Novak said.
