Oil prices shot higher for the second day in succession yesterday after Russia lent weight to OPEC's plans for output curbs by saying it too would reduce supplies. Prime Minister Mr Mikhail Kasyanov said Russian oil companies would propose cutting crude exports and that the government would support the proposal.
London Brent blend crude sailed to $21.35 (€23.91) a barrel, up $1.06, adding to Thursday's 95 US cent gains. Brent had slumped to a two-year low of $18.85 on Wednesday, falling from $27.45 prior to the September 11th attacks.
Though not an OPEC member, Russia is the world's second-largest exporter after Saudi Arabia and this year has lifted exports to more than three million barrels a day, accounting for more than 6 per cent of world oil trade.
In the past, Russia has not enforced output curbs, leaving companies to export at will despite making promises to control sales. Russian exports often subside during winter months when domestic need rises.
On Thursday, OPEC secretary-general Mr Ali Rodriguez said he expected the group to finalise a cut in the range of one to 1.5 million barrels per day. And in Caracas, Venezuelan Oil Minister Mr Alvaro Silva said: "We have excess volumes in the market approaching 1.5 million barrels per day (bpd), so at least there will be a need to cut a million."
Already this year, OPEC has sliced supply by 3.5 million bpd. A further 1.5 million reduction would cut output limits for 10 members, excluding sanction-bound Iraq, to 21.7 million bpd, down 19 per cent from last year.
That would leave OPEC output at its lowest since 1990 and take Saudi Arabia, easily the group's biggest producer, down to 7.05 million bpd.
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