The price of oil jumped 8% at one stage on Thursday after Russian officials said they would discuss production cuts with Saudi Arabia and other Organisation of Petroleum Exporting Countries (Opec) at a meeting next month.
Brent blend almost hit $36 per barrel before sinking back to just over $34 as Saudi sources played down suggestions it had already considered reining in crude volumes.
Alexander Novak, the Russian energy minister, said that 5% reductions had been considered in the past with Opec and would come up again in discussions planned for February.
“We had these sorts of consultations before, when the situation was somewhat different. As we see, prices have fallen,” Novak told the Interfax news agency. A 5% cut was now “precisely the subject for debate.”
The comments were immediately picked up by oil traders as a “buy” signal for crude given Russia’s second largest oil company, Lukoil, had recently said it would support cutbacks if the Kremlin agreed such a plan with Opec.
But analysts at Barclays Capital were unimpressed: “We remain highly sceptical that such a meeting will result in credible cuts in supply; thus, we see this as nothing more than an attempt to shift market sentiment, and we do not expect that it will change the physical market imbalance.”
The Moscow government has until recently been a strong supporter of keeping the oil fields running flat out despite the drop in prices in a concerted bid with the Saudis to chase rival US shale producers out of the market.
With little sign that tactic is working and the Russian and Saudi oil-dependent economies hurting badly from the price slump, there are signs that both countries could be willing to change tack.
In the past decades, Saudi-led Opec has acted as a swing producer, slashing its production to lift global prices. But at a meeting of the cartel last month in Vienna, the Saudis argued against changing Opec output targets.
A little over a week ago the value of Brent slumped to 13 year lows below $28 in the aftermath of some nuclear sanctions being lifted from Iran, a move which will lead to huge new oil exports being made available.
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