But oil prices had shot much higher following a Reuters report that Saudi Arabia’s energy minister, Khalid A. Al-Falih, was set to make a “significant announcement” at the G-20 meeting in China.
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Russia’s Energy Minister Alexander Novak described the announcement as marking a “new era” in cooperation between Russian Federation and Saudi Arabia and insisted that it would have “critical significance” for oil markets, news agency Interfax reported.
Novak described the announcement as marking a “new era” in cooperation between Russian Federation and Saudi Arabia and insisted that it would have a “critical significance”.
“Saudi’s energy minister has said that oil prices are improving and that freezing production is not the only solution”. But on Monday, al-Falih said that the production freeze is a “favorable option but not necessary today”, he said. Indeed, the Saudi foreign minister said last week that his country should sign onto a deal if other powers could agree to one.
Prices had climbed since the beginning of August from just below US$42 per barrel to about $51 mid-month, largely on improved fundamentals as the world oil market absorbed some of the glut and inventories were declining.
In reaction, Brent North Sea crude leapt as high as $49.40 a barrel. Greater co-operation has been under discussion for nearly a year, but lower prices and the geopolitics of the Middle East, not least the two countries’ support for opposing sides in Syria’s civil war, is an ongoing strain.
Both sides also agreed on a bilateral level to monitor the dynamics that can steer crude oil prices.
Iran remained an obstacle to any production deal. That could take months or even years, analysts say.
While Russia-Saudi cooperation is yet to yield firm steps toward steadying the market, a joint press conference between the two oil giants is rare and shows a growing trust and understanding that collaboration is vital to oil’s recovery.
He said countries now recognize that Iran should be allowed to continue raising production as sanctions have been lifted against the country.
Iran, OPEC’s third largest producer, said it would only cooperate in talks to freeze output if fellow exporters recognized its right to fully regain market share. Saudi Arabia, meanwhile, is increasing production gradually to answer the call of short-term demand.
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In this regard, the Ministers noted that constructive dialogue and close cooperation among major oil producing countries is crucial to oil market stability to ensure sustainable levels of investment for the long term.
