Crude oil prices rallied on Tuesday after reports that a production ‘freeze’ has been agreed between Saudi Arabia and Russia.
Comments from Saudi Oil Minister Ali Al-Naimi have confirmed that oil output will be frozen at ‘January levels’.
It comes after talks between Ali Al-Naimi and Russian energy minister Alexander Novak, as well as delegates from Venezuela and Qatar.
“At face value this is clearly positive for oil prices, although they had already risen by 5% in the last 24 hours in anticipation of some sort of deal,” Julian Jessop, Capital Economics head of commodities research, said in a note.
Jessop does, however, also highlight a number of caveats to the apparently positive news; he points out that not all OPEC members are ‘signed up’ to the agreement, Russia will have to ‘play its part’ in full and that January levels for Russia in particular were ‘very high’.
“We will of course follow developments closely today and in the coming days, but this deal leaves plenty of room for disappointment,” Jessop added.
Brent crude gained 3% in London trading this morning, to trade at around $34.50 while West Texas Intermediary futures were up 2.2% changing hands at $30.40.