Crude oil futures rose sharply on Monday amid renewed speculation that major producers including Saudi Arabia and Russia could cooperate to tackle weak prices and rein in oversupply.
Brent crude futures for November delivery were up USD 2.09 per barrel at USD 48.92 a barrel at 0902 GMT.
US crude for October delivery was up USD 1.70 a barrel at USD 46.14 a barrel.
Saudi Arabia and Russia later on Monday are due to make a joint statement during the G20 summit in China calling for cooperation to support oil markets, several sources with knowledge of the matter said.
One of the sources added Russia would likely attend the upcoming meeting of the Organization of the Petroleum Exporting Countries which will be held in Vienna in November.
This comes after Saudi deputy crown prince told Russian President Vladimir Putin on the sidelines of the same summit that cooperation between the two countries would bring benefit to the global oil market.
Saudi energy minister Khalid al-Falih will make a “significant announcement” at a news conference at 0930 at the summit.
“Verbal intervention was again needed to trigger a recovery towards USD50,” senior ABN Amro economist Hans van Cleef said.
“After all, if prices remain too low ahead of the meeting, there is a risk that at some point Russia and Saudi Arabia actually need to act. That would probably be the last thing they want as long as Iran is raising output.”
Brent rallied to above USD50 a barrel in late August, helped by growing talk of a coordinated production freeze, but prices have since fallen as few believe OPEC will act.
Russian Energy Minister Alexander Novak has said that an oil production freeze would be one of the issues discussed by crude producers later this month in Algeria.
Iran, OPEC’s third largest producer, has said it would only cooperate in talks to freeze output if fellow exporters recognised its right to fully regain market share.
Iran is ready to raise its output to 4 million barrels per day in a couple of months depending on market demand, a senior official from the National Iranian Oil Company said.
“Even if successful, an OPEC freeze would likely be a short-term positive but a medium-term negative for oil prices,” Morgan Stanley analysts wrote in a note.