The duo said they will chair the first Russia-Saudi task force on oil and gas in October, to monitor the market, draft recommendations to stabilize prices, and ensure steady investment in the industry; their initiative is reportedly supported by the energy ministers of Kuwait and the United Arab Emirates.
Advertisement
Saudi Arabia and Russian Federation, two of world’s top oil producers, announced at the G 20 leaders meeting in China that they would start working together to stabilise the market, including limiting output.
Brent rose the most in three weeks on Friday after President Vladimir Putin said he’d like OPEC and Russian Federation to agree to a production freeze, speaking before he traveled to China to meet Saudi Deputy Crown Prince Mohammed bin Salman.
Brent crude futures settled up 80 cents or 1.7% at $47.63 a barrel on London’s ICE Futures exchange.
The two countries did not announce specific steps and many analysts think it would be hard for them to join with other big oil producers to restrain output, and that even if they agreed on action, it might not do much to boost prices.
“It seems there is some willingness to provide a price floor now, whereas in the past Saudi Arabia was happy to let the market sort itself out whatever the current price”, he said.
There was no commitment to the much-vaunted freeze on output, with Saudi Energy Minister Khalid al-Falih stating they are in no hurry to limit output, although it is a possibility for the future.
Prices later pulled back however as Saudi Arabia ruled out the need to trim back production, while traders questioned whether the pair would curb global oversupply.
“A freeze is one of the preferred options but it is not needed for the moment”, he said. Emirati Energy Minister Suhail al-Mazrouei also hailed the “positive step”.
Talking to Kommersant-FM radio, Novak said oil prices between $US50 and $US60 would be fair for everyone. Iran refused to discuss the oil production freeze saying it was unwilling to “give up its historic production quota”.
Around 1200 GMT, prices had tempered their gains somewhat. “But when oil output is reduced, other producers would receive the benefit”.
“If there is no agreement to change output, or at least remove the excessive oversupply in the markets then the same oversupply will continue to weigh on investor sentiment – and this has ultimately led to oil retracing almost half its gains already”.
Oil prices have been plagued by a stubborn supply glut that saw the market plunge to near 13-year lows below $30 at the start of 2016.
Advertisement
“So overall the news could have been a lot more bullish for oil – although that is not to say prices will not bounce back again”.
