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Saudi oil minister to meet Russian counterpart

Saudi Arabia’s powerful oil minister Ali al-Naimi will meet his Russian, Qatari and Venezuelan counterparts in Doha on Tuesday, according to a person familiar with the matter, as some Opec members push for co-ordination to restrict supplies and bolster the crude price.

The meeting comes as oil prices languish near lows last seen in 2003, forcing Opec members such as Venezuela, Nigeria to call for a meeting of ministers to stem the slide that has decimated the budgets of producer countries.

The source did not say what the agenda for the meeting would be, but it follows a diplomatic tour by Venezuela’s oil minister Eulogio del Pino aimed at bringing the largest Opec and non-Opec members together.

Oil prices extended gains after reports of the meeting, with Brent crude up 2 per cent near $34 a barrel, while US benchmark West Texas Intermediate rose above $30 a barrel for the first time in a week.

Talk about co-ordinated action has included proposals to lower output or to freeze production near current levels, but any agreement faces a number of barriers.

“The talk of an output freeze is not entirely without substance, even though getting buy-in of Iran and Iraq remains challenging,” said analysts at Energy Aspects in London.

“There may be wider policy objectives at stake here, not just oil policy.”

Saudi Arabia, Opec’s de facto leader, has consistently said that it will not cut output without the largest producing countries both inside and outside the cartel also curbing production; from Iran and Iraq to Russia.

Iran has repeatedly said it will revive its production and exports after the lifting of sanctions against its oil industry last month.

Most analysts have yet to be convinced by any diplomatic manoeuvring, but the willingness of Mr Naimi to travel to Doha is likely to fuel speculation that back-channel talks are gaining at least some traction.

In recent weeks, Russia’s energy minister, Alexander Novak, has said that he is willing to speak with Saudi Arabia, while some Russian companies have indicated in recent weeks they may be willing to participate in production cuts.

But the head of Rosneft, Russia’s largest oil company, indicated last week that any agreement would be difficult to reach.

Igor Sechin, Rosneft chief executive and a close ally of President Vladimir Putin, has repeatedly said over the past year that Russia should defend its traditional markets and could not cut output anyway due to the country’s harsh climate.

Saudi Arabia is also at loggerheads with Iran and Russia over the civil war in Syria.

Source: «FT.com»