Oil Extends Gain From Three-Week High as Russia Flags OPEC Talks

Such a decision would be a major reversal for Saudi Arabia who has consistently rejected calls to cut production, a policy that has been a major driver behind the collapse of oil prices from as high as US$115 18 months ago to as low as US$27 a barrel earlier this month.

“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.

But both contracts surged on Thursday after Russian reports that Energy Minister Alexander Novak had said Moscow was ready to take part in talks with OPEC to establish possible “coordination”.

Falling oil prices have caused the ruble to plunge to record lows, and Wednesday Nikolai Tokarev, head of Russia’s oil pipeline monopoly Transneft, hinted there would be co-operation between the Russian Federation and OPEC producers.

The Organization of the Petroleum Exporting Countries is considering a request from cash-strapped Venezuela to hold an emergency meeting. Prices are up 4.1% this week.

Saudi Arabian officials did not immediately comment on the proposal but a senior Gulf OPEC delegate said: “Gulf OPEC countries and Saudi Arabia are willing to cooperate for any action to stabilise the worldwide oil market”.

USA crude settled up 40 cents or 1.2 percent, at$33.62 per barrel, having hit a high of $34.40 in the session. He argued it was unfair for Saudi Arabia to cede market share to US shale oil drillers and other competitors to benefit other countries’ economies. Iraqi Oil Minister Adel Abdul Mahdi said on the same day that Saudi Arabia and Russian Federation, the world’s two largest exporters, are now more flexible about cooperating to cut output, without providing details.

Excluding the contribution of Indonesia, which returned as an Opec member last month, January’s Opec output totalled 31.9 million barrels per day, the highest since the Reuters survey began in 1997.

Iran’s oil exports are set to rise more than a fifth in January and February from last year’s daily average, data from a source with knowledge of its loading schedules shows, revealing how Tehran is ramping up sales after the lifting of sanctions.

“The longer prices are at these very low levels, the more pain OPEC and non-OPEC producers are feeling, but I think it would still be a very hard negotiating act to get all of the parties to commit to a cut and then follow through with it”, said Richard Mallinson, oil analyst at Energy Aspects.