Oil Price Climbs 3% After Russia and Saudi Arabia Agreement

Oil price has climbed by about 3% after Russia and Saudi Arabia reached an agreement to look for ways to stabilize the oil market.

The announcement was made by energy ministers Alexander Novak and Khalid al-Falih.

The price of Brent crude oil rose by $1.28 on the news to $48.11 a barrel.

A statement said the plan was to support the “stability of the oil market… ensuring a stable level of investment in the long term.”

The start of 2016 saw the price of oil fell to its lowest level in nearly 13 years due to a production glut and is still far below the $110 a barrel price recorded just two years ago.

Russian energy minister Alexander Novak said the agreement, which might include attempts to limit oil output, was a “historical moment” between members of OPEC, which is the traditional oil producers’ cartel, and non-members, of which Russia is one.

He said that Russia was willing to join an oil output “freeze”.

His Saudi counterpart Khalid al-Falih told Al Arabiya TV: “Freezing [production levels] is one of the preferred possibilities but it’s not necessary today.

“The market is getting better and we have noticed that prices reflect this [improvement].”

Strategies to keep prices high by limiting production are usually the preserve of OPEC and are often not successful.

However, Russia and Saudi Arabia are the world’s two largest oil producers.

Alexander Novak and Khalid al-Falih will meet again later this month and again in October and November.

The outline agreement, to set up a joint task force, was publicized at a news conference at the G20 summit taking place in the eastern Chinese city of Hangzhou.

The agreement to talk about a deal, despite the lack of detail, was welcomed by two other oil producers.

Kuwait’s acting oil minister Anas al-Saleh: “This dialogue confirms that the main oil producers are watching the oil market… to help achieve stability.”

UAE’s energy minister Suhail al-Mazroui tweeted: “UAE, as an active and responsible member of OPEC will always support any joint efforts which will benefit market stability.”