While US markets were closed Monday for the Labor Day holiday, oil rose in global markets on an agreement between Saudi Arabia and Russian Federation to cooperate to support oil prices.
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Russian President reportedly met with Saudi Deputy Crown Prince Mohammed bin Salman on the sidelines of the G20 to discuss how to best address a global supply glut that has hammered oil prices for the last two years.
The commodity now trades near $46.42 a barrel. Its US counterpart, West Texas Intermediate crude, swelled as much as 1.32 per cent to $45.42. He added, however, that freezing output was one of the preferred possibilities. While the markets are spotty on any support of a freeze, it seems that any freeze in production will end up on the floor as the sceptics don’t see either country, or OPEC, to stick with self-imposed limits. The ability to support market prices comes off the back of actions rather than words, yet words of course allow us to gain a better idea of whether the meeting may eventually provide us with the crude price rise many are anticipating.
Crude has been buoyed recently by hopes that the world’s biggest oil producers will be able to hash out a production freeze deal at informal talks in Algeria on 26-28 September – but analysts remain unconvinced.
However, Russia and Saudi Arabia resorted to make promises of greater cooperation.
Unlike Saudi Arabia, Russia seems to care more about getting a good price for its oil than any political consideration.
The previous attempt at reaching a deal in April was scuppered by OPEC member Iran’s refusal to agree to any production freeze, and there are worries about the chances of a deal in Algiers.
“Oil production amounted to 10.71 million barrels per day in August 2016, although it was down 1.6 per cent month-on-month”.
Iran continues to be determined to raise oil exports after the lifting of Western sanctions earlier this year and is refusing to take part in any output freeze.
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Meanwhile, Iran expects to complete a pipeline and a terminal to export a new grade of crude by year-end, boosting the country’s drive to ramp up oil production to pre-sanctions levels.
