The world’s two biggest oil producers Saudi Arabia and Russia said Monday they had agreed to “act together” to try to stabilize oil prices, including limiting output, though it’s unclear what that might entail.
The price of oil rose in trading Monday. The U.S. benchmark futures contracts increased 1.7 per cent, or 73 cents US, to $45.17 US a barrel in electronic trading on the New York Mercantile Exchange. U.S. crude for October delivery was up $1.11 a barrel at $45.55 a barrel, after reaching a high of $46.53 a barrel earlier in the session.
Energy Ministers Alexander Novak and Khalid al-Falih met Monday on the sidelines of the Group of 20 countries’ summit in China. A joint statement released by Russia said both ministers “recognized the need to restrain an excessive volatility of the oil market” and agreed to act together “in order to stabilize the oil market.”
In their meeting, the Ministers recognized the importance of maintaining their ongoing dialogue about current developments in oil and gas markets and indicated their mutual desire to further expand their bilateral relations in energy. This stems from the fact that the two countries currently shoulder the responsibility of producing more than 2I -percent of global oil demand which is required to fuel global economic growth, improve standards of living and help achieve the Millennium Development Goals.
Novak and al-Fatih said they would chair the first Russia-Saudi task force on oil and gas in October. Russia, which is not a member of OPEC, the oil producing group of countries, this year supported calls to freeze production, but the efforts fell through after OPEC member Iran opposed the plan. It was not clear from the joint statement what exactly Russia and Saudi Arabia would be prepared to do to help prop up the markets but the Russian minister mentioned a production freeze.
“We believe that the market right now is taking too long to balance out. It’s been two years, and joint steps which were considered earlier this year including a production freeze could be a great help in helping to balance the markets as soon as possible,” Russian news agencies quoted Novak as saying.
Speaking to reporters after the meeting, al-Falih, the Saudi minister, said in comments carried by the Interfax news agency that the freeze “is not the only solution” but refused to elaborate.