President Vladimir Putin had met Saudi Deputy Crown Prince Mohammed bin Salman in China on Sunday – and vowed to address a global glut and overproduction that has hammered prices for two years.
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MOSCOW, Sept 5 Russia and Saudi Arabia are now discussing concrete parameters of an oil output freeze deal, Russian Energy Minister Alexander Novak said in a statement on Monday after talks with his Saudi Arabia counterpart. “We are satisfied with today’s oil price in general”.
In Novak’s view, a way to tackle the situation would be for the two countries to choose a month that would be considered the benchmark for the production freeze, starting from the second half of this year, getting all the support needed from other producers. “Despite the bearish sentiment engulfing the market, we still see strong demand for our crude in most parts of the world, especially as supply outside OPEC has been declining fast, supply outages increasing, and global demand still showing signs of strength”, he told state news agency SPA.
The declaration emphasizes the need for dialog on the oil market situation and for development of bilateral cooperation.
In reaction, Brent North Sea crude leapt as high as $49.40 a barrel. Iraq, Iran and the United Arab Emirates also boosted their output, compensating for shrinking production from embattled OPEC members Nigeria and Venezuela.
The price collapse of the past two years has hit the budgets of major producers such as Russian Federation and Saudi Arabia while leading to unrest and social tensions is smaller producing nations such as Venezuela and Nigeria. I had explained in my previous article how oil (NYSEARCA:USO) will continue to remain volatile in the coming time.
The statement increased expectations of the possible deal on output freeze and oil prices rose following the announcement, the increase, however was below the anticipated level.
Cooling U.S. rate hike expectations helped world shares notch up solid gains on Monday, though they came off highs as investors concluded an oil market pact between Saudi Arabia and Russian Federation lacked substance.
The price of oil is going insane on Monday as investors around the world react to confirmation that Saudi Arabia and Russian Federation have held talks about the potential to freeze oil production.
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“He also sought greater cooperation in infrastructure, particularly modernisation of railway stations”, the sources said. Mr Putin told Bloomberg in an interview last week that he’d like his nation and Opec to reach an output freeze, exempting Iran until it raises production to pre-sanctions levels. Several attempts have failed in the past, in particular because Saudi Arabia has been wedded to keeping output high to hold market share.
