Oil prices rise for three straight days
Prices for a barrel of oil hit a three-week high and rose above a 12-year low set last week at $26.55 a barrel.
Meanwhile, OPEC member nations such as Nigeria and Venezuela have called for oil production cuts to help boost the price of the commodity higher.
“From our point of view, it is unlikely that all the countries within OPEC can agree on production cuts, let alone those countries which are not in the OPEC coalition”, Russia’s RIA news agency quoted Novak at the time, citing an interview with business channel RBC TV.
Russia’s Novak said Thursday in St. Petersburg that Saudi proposals for a cut of as much as 5 per cent at previous Opec meetings related to crude-producing nations in general, not focusing on Russia, Interfax reported.
Russian Energy Minister Alexander Novak confirmed Russia’s readiness to meet with producers to discuss oil production.
While Saudi is far from penniless, the fall in the price made the Gulf state tap the bond market for $27bn late past year and it is now mulling an initial public offering of state-owned oil company Saudi Aramco. Crude oil prices are facing negative pressure because markets are flush with oil as global economic momentum slows, a trend reflected in emerging weakness in China.
The crude oil price increased 2.26% to $33.03 per barrel on Thursday as the Russian government continued talks with Saudi Arabia at the OPEC oil cartel about production cutback. Iraq said earlier in the week that Saudi Arabia and Russian Federation had become more flexible about cooperating to reduce output. When asked if that proposal remains for a proposed meeting with Opec in February, he declined to comment, saying, “that is exactly the subject of discussion”.
President Vladimir Putin, who has yet to comment on the idea of joint cuts, sees the oil sector as an important bargaining chip in relations with the West that have become tense due to disagreements over Russia’s annexation of the Crimea region and over the conflict in Syria.
Regarding the Russia’s involvement in the possible deal, analysts have two key concerns: how production will be cut with multiple oil producers and what magnitude of burden Russian Federation will share with OPEC members.
Barclays stated on Thursday: “We remain highly sceptical that such a meeting will result in credible cuts in supply; thus, we see this as nothing more than an attempt to shift market sentiment, and we do not expect that it will change the physical market imbalance”. If each country cut production by 5%, that would shrink global oil output by more than a million barrels a day, which is roughly equal to the current oversupply in the market, according to analysts.