Lots of talk with the potential to move oil markets on tap this week.
And already today we’re got the first installment of that talk from Russian President Vladimir Putin at the World Energy Congress in Istanbul. (The congress brings together OPEC and non-OPEC producers such as Russia and Norway.) “Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same,” Putin said. “In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”
As you might suspect, that talk sent oil prices higher with the international Brent benchmark moving up 3.2%% to $53.59 a barrel. (Brent prices are now up 15% since OPEC promised production cuts at its meeting in Algiers.) U.S. benchmark West Texas Intermediate climbed 3.3% to $51.47 a barrel.
Besides the World Energy Congress, this week brings OPEC’s own monthly report on production on Wednesday and then the report and forecast from the International Energy Agency on Thursday. All this is leading up to the November 30 meeting of OPEC in Vienna that is supposed to fill in all the details on production cuts left blank in Algiers.
What kind of details? Oh, minor ones like would the agreement include actual reductions in production or just a freeze on production that is already running at historic highs.
Russia for example, would prefer a production freeze, said Energy Minister Alexander Novak. So far in October Russia is pumping at a rate of 11.2 million barrels a day, which beats the post-Soviet production record set last month. A freeze at that level would do nothing to reduce the current excess of supply over demand in the oil markets. The numbers floating around at the Algiers meeting would reduce OPEC production to between 32.5 million and 33 million barrels a day for a cut of about 1% to 2% from recent record production.
Ever willing to try to talk oil prices up, Saudi Arabia’s energy minister, Khalid al-Falih, said Monday that he believes the November meeting will yield production cuts that could push oil prices as high as $60 a barrel. That price, he noted, isn’t “unthinkable.”