The price of a barrel of oil surged higher on Thursday and hit a three-week high following reports that OPEC nations will gather in February to potentially discuss a cut in oil production.
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If OPEC moves first to slash production, it would come as a surprise to analysts, who have expected less-profitable US energy companies to reduce production first.
He also told reporters that there was a proposal for a meeting between OPEC and non-OPEC countries at the level of oil ministers and that Russian Federation was ready for the meeting.
With sanctions lifted this month, Iran says it is increasing its oil output by 500,000 barrels per day (bpd) and boosting exports, a plan that other Opec sources say makes any global cut agreement harder. A group of OPEC members, including Nigeria and Venezuela, have also pushed for their own emergency meeting ahead of the cartel’s June 2 gathering in Vienna as plunging oil prices erode state revenues. Brent was trading at around $34 a barrel at 1940 GMT.
Iranian Oil Minister Bijan Zanganeh, attending a Franco-Iranian summit in Paris on Thursday, said Iran had not been contacted by Russian Federation about any cuts in output.
The Energy Information Administration said on Wednesday that USA crude inventories climbed by 8.4 million barrels last week, higher than analyst expectations for a rise of 3.3 million barrels. The high that was reached was right at the key 50-day moving average, and closely approached major resistance around the $36 level. This will clearly depend on the extent and scope of participation in this potential agreement.
If implemented, the output reductions could help ease a supply glut that caused oil prices to fall more than 60 percent since mid-2014.
The Moscow government has until recently been a strong supporter of keeping the oil fields running flat out despite the drop in prices in a concerted bid with the Saudis to chase rival U.S. shale producers out of the market.
Energy analysts said Thursday the proposed production cut would help shrink some of the global supply glut. However, a senior Gulf delegate stated that “Gulf OPEC countries and Saudi Arabia are willing to cooperate for any action to stabilize the worldwide oil market”, according to the Reuters news agency.
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Opec kingpin Saudi Arabia reported a record state budget deficit of around $100 billion pressured by faloling oil prices. The relief rally was triggered by the prospect of an alliance between Russia, Saudi Arabia and further OPEC countries to cut output.
