Russian Energy Minister Alexander Novak said on Saturday that an oil production freeze would be one of the issues discussed by crude producers at their meeting later this month in Algiers.
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Investors had hoped that Russian Federation and Saudi Arabia would issue a “more concrete/policy statement to curb the supply”, wrote Naeem Aslam, chief market analyst at Think Markets, ahead of the announcement.
The price of oil jumped on the countries’ statement.
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.
Southwest and Rocky Mountain oil producers say they feel they are under OPEC and Saudi Arabian “attack”.
The Opec member can raise production to 4 million barrels a day in two to three months from the current daily level of about 3.8 million, Mohsen Ghamsari, director of global affairs at state-run National Iranian Oil Co, said in Singapore on Monday. OPEC’s de-facto leader Saudi Arabia has also signalled willingness to cooperate as it faces budget pressures and seeks to float a stake in state-owned producer Aramco.
The Persian Gulf state is seeking to regain market share after the removal of worldwide sanctions earlier this year, and its decision not to attend a gathering in Doha in April led to the collapse of a proposal to freeze output then. “Integrated companies (with production and refining combined) will survive and dominate in a second downturn with a smaller market share in America alongside potential 60-percent oil imports from foreign producers outside North America”.
President Vladimir Putin met Deputy Crown Prince Mohammed bin Salman on the sidelines of the G20 in China on Sunday and said they would work to address a global glut and overproduction that has hammered prices for the past two years.
Oil prices up by 5%.
As we’ve seen time and time again around oil meetings and events, the fundamentals get thrown right out of the window and all the bulls start getting excited that someone is going to come riding in to send oil on a massive run higher.
By 0653 GMT, London Brent crude for November delivery was up 7 cents at $46.90 a barrel, recovering as the dollar slipped slightly versus a basket of currencies.
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“Even though there will be discussions in Algeria, there’s no strong feeling that anything will be done, so the supply remains high”, Nunan said.
