Crude oil prices have jumped to almost one-year high's on Monday in a shocking turn of events as Russian President Vladimir Putin disclosed that Russia was ready to join the cartel’s efforts to reduce global oil supply.
At the time of writing, WTI Crude traded up 3.07 percent to US$51.34, while Brent Crude was up 2.66 percent at US$53.31. Last year on October 12, Brent Crude was trading at US$56.45.
“We believe freezing or even reducing oil production is the only way to save the stability of the energy sector. Russia stands ready to join common efforts to limit oil production and urges others to as well,” The Wall Street Journal quoted Putin as saying at an energy conference in Istanbul.
Last month, OPEC producers agreed to discuss a deal to limit production to a range of between 32.5 million barrels per day and 33 million bpd. Oil prices rallied after that announcement then, but later lost steam amid growing skepticism if OPEC would be able to agree to quotas and more importantly, to stick to its decisions.
Monday’s comments by Putin injected renewed optimism in the market that OPEC and non-OPEC countries might be able to find common positions in efforts to reduce the oil glut and rebalance the market.
Russia’s Energy Minister Alexander Novak, however, said that his country would prefer to freeze production rather than cut it, although it would consider a potential proposal from OPEC to cut.
The top Russian officials are attending the World Energy Congress in Istanbul, which will be the venue for informal OPEC and non-OPEC meetings with ministers discussing the deal-to-make-a-deal reached in Algiers last month. Notably, Iran and Iraq have not sent their oil ministers to Istanbul, in a sign that no important decisions would emerge this week, or that whatever decision was made would not involve them.
Saudi Arabia’s energy minister, Khalid al-Falih, also re-invigorated the market on Monday saying he was optimistic that major oil producers will agree to cut production by November, and that $60-a-barrel prices were not out of the question.
Nevertheless, the oil market is bracing for a volatile week, with comments from the meeting expected to influence prices, on top of the OPEC monthly bulletin and the International Energy Agency (IEA) monthly report also scheduled for release this week.
By Tsvetana Paraskova for Oilprice.com
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