Oil up on Saudi, Russia meeting

Oil prices have surged to their highest level in more than a week in anticipation of a meeting today between Saudi Arabia and Russia in Doha.

US crude was up $1.43 to $30.87 by 0330GMT, according to Reuters, while Brent rose as high as $34.72.

The meeting, reportedly between the kingdom’s oil minister Ali Al Naimi and his Russian counterpart Alexander Novak, is the latest effort by some OPEC members to encourage the cartel to cut output.

Venezuela has lobbied Russia, Saudi Arabia and Iran to reach an agreement to balance oil prices, which are down at least 7 per cent this year, and will be in attendance, according to reports.

“The fact that there is going to be a meeting is an advance,” CMC markets chief analyst Ric spooner told Bloomberg. “There’s obviously a long way to go. The consensus view is that we’re about 12 to 18 months from achieving a balance in the oil market, even by maintaining the status quo. Making a decision to coordinate a supply reduction would just be ceding share to other producers.”

However, Russia would face challenges if it were to cut output, including damage to oil fields and pipelines, the need for new storage tanks or the loss of production from some wells entirely.

The chief executive of Russia’s largest oil producer Rosneft expressed doubts last week that there would be any coordinated action to curb output.

Iran too is seeking to boost output by up to 1 million barrels a day to regain market share following the removal of nuclear-related sanctions against the country in January.

It has booked shipments with European companies and is looking to boost exports to India.