Iran, OPEC’s third largest producer, has said it would only cooperate in talks to freeze output if fellow exporters recognised its right to fully regain market share.
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Brent rallied to above $50 a barrel in late August helped by growing talk of a coordinated production freeze, but prices have since fallen as few believe OPEC will cut output.
Saudi Arabia and Russian Federation on Monday said they would co-operate to try and stabilise oil markets, but stopped short of agreeing immediate action to restrict production and end a glut that has halved prices in the past two years. U.S. share markets were closed for the Labour Day holiday.
And although some analysts are forecasting oil prices will stay at the $45-$50 level for some time, other well know oil specialists, notably Canada’s Josef Schachter, is forecasting oil to reach the low $30 level by the fourth quarter of this year.
Upon news of the Russia-Saudi Arabia statement, the price of Brent crude oil, used to price global oils, rose by 4% but then fell to 1% higher at $47.31 a barrel.
A barrel of West Texas Intermediate for October delivery rose 39 cents to close at US$44.83 in NY.
However, there were no details on any deal to freeze oil output around current levels, just weeks before Moscow and the 13-nation Organization of the Petroleum Exporting Countries (OPEC) crude cartel meet in Algeria to discuss a global supply glut.
“Freezing production is one of the preferred possibilities but it does not have to happen specifically today”, Saudi oil minister Khalid Al Falih said.
Nigerian Petroleum Minister of State Emmanuel Kachikwu added it was “good news” that “should help firm the price” if both sides agree to a “strong level of discipline in terms of production”. Saudi Arabia also supported a freeze, however OPEC members Iran and Iraq were non-committal.
The agreement at the G20 followed a meeting between Saudi Deputy Crown Prince Mohammed bin Salman and Russian President Vladimir Putin at the weekend.
Brent for November delivery stood at $47.49 a barrel, up 66 cents from Friday’s close.
“There were no… immediate indications that this (deal) will lead to lower oil output”, FXTM analyst Jameel Ahmad told AFP.
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Importantly, this observation has nothing to do with a special meeting that is taking place in Algeria, but oil prices typically react well to technical observations and anticipate news.
