Russian Federation weighs Opec proposal for oil production cutbacks

Oil prices have made modest gains at the end of a turbulent January that pushed prices sharply lower amid worries about global glut.

Saudi Arabia is keen to defend market share and Russia’s inability to cut production in winter months makes coordination hard.

Oil prices also boosted by the possibility that major production countries may cooperate to curb production.

In Russia, the rouble hit an all-time low, street protests have flared in Azerbaijan and investors are concerned about a potential debt default by Opec member Venezuela.

“It’s important to keep distance between producers of traditional oil and shale oil in order not to undermine the market”, the analyst said.

Saudi Arabia has repeatedly called on non-members to contribute to output cuts if they want OPEC to help producers deal with the oil glut with the world running out of space to stockpile unwanted crude. “The next day he will meet with Mohammed [Saleh] al-Sada, OPEC President and Minister of Energy of Qatar; then he will visit the Islamic Republic of Iran, and the Kingdom of Saudi Arabia”, PDVSA said in a Friday statement.

Russian Energy Minister Alexander Novak said that a decision on reducing oil production can be taken only if all countries that export crude agree, and that the country is ready to discuss the issue of cutting oil output volumes.

The prices scored gains on the strength of speculation that Russian Federation and the Organization of the Petroleum Exporting Countries (OPEC) plan a meeting to discuss oil output cuts to shore up prices.

Brenda Kelly, head analyst at London Capital Group, said the proposed cuts were unlikely to happen. This pulled down Brent crude oil prices.

Opec oil production soared to its highest level in nearly two decades this month, with Iran driving the largest increase in supply, according to a new survey. The continued downturn has been attributed to Saudi Arabia-led OPEC’s unwillingness to cut output in fear of losing market share.

Analysts of the US JP Morgan bank see a low probability of a deal on oil production cuts between OPEC and non-cartel countries in the near-term.

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