A short-term cap in oil output would reduce market volatility, Russian Energy Minister Alexander Novak said on Monday at a meeting with OPEC Secretary-General Mohammed Barkindo, as both are looking at ways to stabilise prices.
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Since the announcement, Brent LCOZ6, -0.62% and West Texas Intermediate CLZ6, -0.63% futures prices for crude oil have climbed by more than 10%.
Oil prices remained stable during Monday trading despite the refusal by OPEC’s second-biggest producer Iraq to join the Saudi Arabia-led initiative for the cartel to cut production.
On Saturday, Iran’s Supreme Leader Ayatollah Ali Khamenei alleged that the decrease in global oil prices is leverage to exert pressure on independent countries by the United States.
According to Bloomberg, Al-Luaibi said on Sunday that Iraq was now pumping more than the 4.7 million bpd it produced last month, and could further raise output.
An Energy Department spokesperson said the US isn’t participating in any informal discussions on an OPEC agreement or in next week’s technical session.
Iraq became the fourth OPEC member – after Iran, Nigeria and Libya – to seek an exemption from output limits.
For one, the United States was producing only about 5.9 million b/d and was in the midst of a historic supply decline that would crater at about 3.9 million b/d by October 2005.
On Monday, Novak repeated that an oil output freeze is “an effective tool Russian Federation is ready for (in a move) to balance the market”.
In fact, Asia’s oil demand is actually supporting oil prices at the moment.
Brent, the worldwide benchmark for crude, was down 60 cents at $51.18 a barrel by 11:53 a.m. EDT (1553 GMT).
Richardson’s tenure from 1998 through 2000 came at a much different time for both the US’ relations with OPEC and its role in the world oil market. Although Japan’s crude oil imports were reduced by 4.6 % in September, the latest trade data from Asia reveals that the markets are slowly returning to balance.
Oil production from OPEC nations hit a record last month, although members have agreed to come up with a plan to reduce it before a meeting on November 30 in Vienna, before which Novak said negotiations would continue. They accounted for the vast majority of the 14% surge in imports this year by China, which now rivals the U.S.as world’s largest crude importer.
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“U.S. shale production should continue to decline through the first quarter of 2017, but could recover faster than anticipated with higher prices”, he said.
