Oil prices jumped today, 10%, on Tuesday, a day after the biggest drop in nearly thirty years, at a time when Russia hinted at the possibility of resuming negotiations with Saudi Arabia on production cuts.
And by 10:41 UTC, Brent crude futures rose $ 3.36, almost 10%, to $ 37.72 a barrel, after hitting the highest level in the session at $ 37.75 a barrel.
West Texas Intermediate crude oil gained $ 3.14, or about 105 as well, to $ 34.27 a barrel, after reaching a high level in the session at $ 34.42.
Yesterday, the two benchmarks fell 25%, to their lowest levels since February 2016, and recorded the largest percentage decline in one day since January 17, 1991, when oil prices fell when the Gulf War erupted.
This big drop came yesterday after the collapse of a three-year agreement between Saudi Arabia and Russia and other major oil producers to reduce supplies, which sparked a price war to increase market share.
Saudi Arabia, the world's largest oil exporter, has fueled tension with plans to pump 12.3 million barrels per day in April, which is well above current production levels of 9.7 million barrels per day, according to Amin Al-Nasser, CEO of Saudi Aramco today.
Al-Nasser told Reuters that the crude supply in April will be "an increase of three hundred thousand barrels per day from the maximum sustainable capacity of 12 million barrels per day."
| Novak: Russia may increase production rapidly (Reuters) |
Russian response and another Saudi
Russian Energy Minister Alexander Novak said that he does not rule out taking joint measures with OPEC to stabilize the market, adding that the next "OPEC Plus" meeting is scheduled to take place between May and June next.
"I would like to say that the doors have not been closed," the Russian minister told Russia 24, adding that Russia's failure to reach an agreement with OPEC to extend production cuts "does not mean that we cannot cooperate in the future with OPEC countries and those outside."
Novak stated that Russia may increase its production rapidly as well, and said, "We have the possibility to achieve growth in production. I think that in the near term we will be able to increase (production) by two hundred and three hundred thousand barrels per day, with the possibility of reaching five hundred thousand barrels, this is in near future".
He added that Russia plays a competitive role in the world market, given its lower production costs.
Russia has refused to agree to a proposal by OPEC ministers led by Saudi Arabia to reduce production by an average of 1.5 million barrels per day, at a time when Russian oil companies fear a loss of market share and competition from shale oil produced by the United States.
But Saudi Energy Minister Prince Abdulaziz bin Salman assured Reuters that he does not see a need to hold an "OPEC Plus" meeting between May and June in the absence of an agreement on the measures that must be taken to deal with the impact of the Corona virus on demand and prices.
"I do not see any justification for holding meetings in May and June that would only show our failure to do what is necessary in such a crisis and adopt the necessary measures," he said.
Saudi Energy Minister: I do not see a justification for holding meetings that would only show our failure to do what is necessary (Reuters) |
Russian confidence
Kremlin spokesman Dmitry Peskov said Tuesday that he does not rule out the resumption of negotiations with Saudi Arabia on crude oil production and the stabilization of global markets.
The comments came after the collapse of talks between the Organization of Petroleum Exporting Countries (OPEC), which includes Saudi Arabia, and OPEC Plus (which includes Russia) in Vienna last Friday, which led to a sharp drop in oil prices.
Peskov suggested that the market volatility caused by the collapse in oil prices would continue for a while, but added that volatility was expected and taken into account.
He said that the Russian economy has sufficient reserves and is strong enough to meet temporary market instability.
Meanwhile, two informed sources told Reuters on Tuesday that the Russian Energy Ministry called for a meeting with oil companies tomorrow Wednesday to discuss future cooperation with OPEC, among other issues, and one source said, "We intend to discuss whether we will return (to cooperate with) OPEC or not."