NEW YORK – US oil prices finished at their highest level of 2016 on Monday (Oct 10) after President Vladimir Putin said Russia was ready to align with OPEC’s push to limit oil output.
US benchmark West Texas Intermediate for November delivery jumped US$1.54 to US$51.35 a barrel on the New York Mercantile Exchange, the highest closing price since July 2015.
Putin said Russia would support the agreement in principle reached last month by the Organisation of the Petroleum Exporting Countries to limit output. OPEC is scheduled to meet in November to hash out details of the agreement.
“In the current situation, we believe a freeze or a cutting of the production of oil is the only way to preserve the stability of the energy sector and accelerate a rebalancing of the market,” Putin said at the World Energy Congress in Istanbul.
“Russia is prepared to join joint measures limiting production and calls on other exporting countries to do the same,” he added.
Carl Larry of Frost & Sullivan said Russian support was critical to the deal’s prospects for turning the oil market around after a two-year slump.
“The Saudis could talk it up, but unless they had Russia working with them a deal would not happen,” Larry said. “Soon as Russia is in, this is a big deal going on.”
Oil prices were further propelled by remarks from Saudi Energy Minister Khalid al-Falih predicting oil prices could rise further. “We are seeing the convergence of supply and demand,” al-Falih said. “It is not unthinkable we could see US$60 (a barrel) by the year end.”