Putin pushed up oil prices after output cut declaration

Crude-oil futures on Monday posted their best close in more than a year as bullish comments from Russian President Vladimir Putin and Saudi Arabia’s energy minister set off a surge in prices amid a meeting of major oil producers in Istanbul to try to cement a cap on oil production.

Putin assured that Russia was ready to co-operate with Saudi Arabia and OPEC to stabilise the oil market by either freezing or cutting output. "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," he said at the World Energy Congress in Istanbul on October 10.

His comments spurred a big jump in prices on October 10 and 11, with premium crude soaring $1.54 to end at $51.35 a barrel in New York, its highest closing price since July 2015. Premium crude ended at $53.14 in London.

For all the talk, Russia is still pumping at record levels and for any agreement to stick it is quite likely that the Saudi’s might have to cut output, which might not be as easy as it sounds.  “Obviously, the market is starting to take OPEC seriously and when you have Vladmir Putin saying that he will agree to a freeze, if not a production cut, it makes the people who were skeptical about a deal become less skeptical,” said Phil Flynn, senior energy analyst at Price Futures Group.

An extensive agreement on oil isn’t expected until OPEC convenes for its official meeting November 30 in Vienna.