Oil prices rise on talk of production cut by Russia, Opec

In this Feb. 26, 2011, file photo, an employee works at a refinery inside the Brega oil complex, in Brega, eastern Libya. Opec produces one-third of the world’s oil and, in theory, at least, can affect global oil prices depending on how much oil it decides to sell. AP

NEW YORK, United States — Oil prices were lifted Tuesday by talk of possible coordination between Saudi Arabia and Russia to cut petroleum output.

US benchmark West Texas Intermediate for March delivery rose $1.11 to $31.45 a barrel on the New York Mercantile Exchange.

In London, Brent North Sea crude for March delivery rose $1.30 to $31.80 a barrel.

Iraqi Oil Minister Adel Abdulmahdi said at a conference in Kuwait that Baghdad was “ready to cooperate” on cutting production to raise oil prices, but only if non-Opec producers did so as well.

Abdulmahdi was also quoted by Bloomberg as describing increased “flexibilty” on output between Russia and the Organization of the Petroleum Exporting Countries (Opec).

State-owned Russian news agency Tass reported that Russian oil company Lukoil has asked the Kremlin to work with Opec to limit output.

That followed remarks Monday from Opec secretary general Abdullah el-Badri calling for Opec and non-Opec producers to work together to boost prices.

Analysts expressed skepticism that oil producers are close to such an agreement.

“The need for a reduction in output is clear – as it has been to us for the past 18 months – but it remains uncertain whether Saudi Arabia and its allies within Opec are ready to return to the bargaining table,” said Tim Evans, analyst at Citi Futures.

“And without Saudi Arabia on board, there’s simply no deal and the market will be left to rebalance naturally as non-Opec output declines, a slow and still painful process.”

“Vague talk of a possible joint production cut with Russia and Opec is doing the rounds again,” noted CMC Markets analyst Jasper Lawler.

“Any joint action seems unlikely since US shale producers would just use the resulting higher prices as an opportunity to ramp up their own (output) again.”

RELATED STORIES

Oil prices drop to 2003 levels, lowest in 12 years
Iran ‘return’ to oil market risks more price pressure