Saudi Arabia pushes oil price higher as it promises to stabilise the market
The oil price was been pushed higher this afternoon after de facto Opec leader Saudi Arabia vowed it will try to limit volatility as it tries to stabilise the market.
Oil investors are closely watching for any sign that Saudi may be weakening its previous commitment not to cut output even as it tries to broker a deal with Opec and non-Opec producers to freeze production at January levels.
Brent crude is trading at $36.36 per barrel, while the US benchmark West Texas Intermediate is going for $33.38 a barrel.
The last time Brent was below $30, on 11 February, the price of the international benchmark has risen by 17 per cent. The price has a long way to climb back to heady highs of $115 over a year and a half ago however.
"The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action," the Saudi cabinet said in a statement.
The kingdom, which has seen its oil market share shrink on the rise of expensive shale drilling in the US, is has said Opec can no longer regulate the global oil supply without the support of the US and Russia.
Russia has already signed up to a deal earlier this month between Saudi Arabia, Venezuela, and Kuwait to cap their production at January levels, but only if other countries make a similar agreement.
Saudi has arranged for a mid-March meeting of Opec and non-Opec countries and has promised it will bring more producers in on the deal.
The main obstacle to the historic deal is Saudi arch rival Iran, who has pledged to continue to ramp up its production to regain market share it lost due to recently lifted trade embargoes.
Iraq is also intent on pumping more oil.
The US shale industry has been far more resilient to the low oil price than many had predicted, with stockpiles in the US continuing to rise.
On top of being able to endure low price for longer, the US industry could bounce back quicker than expected as well, forcing the price to stay low even if Saudi is able to broker a deal.
Two of the largest US shale producers, Continental Resources and Whiting Petroleum, has said they could bounce back with oil at $40, $20 lower than previously thought.