Oil Prices Surged by Possible Production Cutback

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Reiterating Iran’s official stance, Mr. Rouhani blamed regional rival Saudi Arabia for the dive in Crude Oil prices, which have halved since last May as global supply outstrips demand.

He said the discussions could be on making production cuts of up to five percent per country.

The poll forecasts USA light crude will average $41 a barrel this year compared to around $49 in 2015.

Four OPEC representatives said they hadn’t heard of any plan for talks. “But overall we expect a rebound in oil prices”.

Oil prices were about 3 percent higher on Thursday after the Russian energy minister said Saudi Arabia had proposed that oil-producing countries trim output, which would be the first global deal in over a decade to help clear a glut that has depressed prices for over a year and a half.

Saudi Arabia is investing in its oil fields to sustain production amid a price plunge to the lowest in 12 years, according to Aabed A Al-Saadoun, deputy minister for company affairs at the Ministry of Petroleum and Mineral Resources.

“It’s possible that Russian Federation could be testing the waters to gauge how OPEC members would respond to the idea of cuts”, said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former senior oil official at the White House.

He noted that Iran and Iraq were determined to boost production, and were unlikely to come together with Saudi Arabia to cut OPEC output. US crude is also set for nearly 6 percent weekly gain.

Novak said on Thursday that it was reasonable to discuss the situation on the oil market and that OPEC was trying to organize a meeting with other producers next month.

A turnaround in oil’s fortunes would be welcomed by oil-rich countries where the price collapse has caused budget squeezes and political turmoil with some even forced to devalue their currencies. That’s the main reason why oil prices have crashed as much as 75% since mid-2014, sinking as low as $26 a barrel last week.

The data also showed U.S. crude oil stocks hit their highest on record in the week to January 22, due largely to increases on the U.S. Gulf Coast, a major oil hub, according to the report.

 

Oil price volatility has climbed to its highest since 2009 as traders try to price in an uncertain supply outlook after Russian Federation hinted it was open to coordinating output with OPEC just as Iran lifts exports following an end to worldwide sanctions.

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