Oil Prices Hit 1-Year High As Saudis Hint At $60
U.S. oil prices rose back above $50 per barrel early Monday as top producers met in Istanbul to discuss the production cuts agreed on last month, and Saudi Arabia's energy minister said prices could hit $60 a barrel later this year.
Khalid al-Falih seemed hopeful that producers would be able to hash out the details for a production cut, adding that a rally to $60 wasn't "unthinkable" by year's end.
"I think the role of responsible producers around the world, and Saudi Arabia considers itself to be the leading one, is to try to balance supply and demand in a very responsible way," he said at the conference in Istanbul, according to the Wall Street Journal.
But Falih tempered those remarks saying that the cartel should have a "gentle hand on the wheel" and not do "anything dramatic."
Russia is also ready for a freeze or a cut, President Vladimir Putin said, according to Bloomberg. And the head of the International Energy Agency said a production deal would help rebalance the oil market sooner.
Brent rose 1.3% to $52.59 per barrel. U.S. crude climbed 1.3% to $50.45.
Exxon Mobil (XOM) edged up 0.9% to 87.50 in premarket trading in the stock market today. BP (BP) was up 1.1% early to 36.57. Chevron (CVX) wasn't active early. Royal Dutch Shell (RDSA) rose 1.7% to 52.18.
IBD'S TAKE: OPEC agreed to cut production after forcing U.S. producers to trim output, though they have proved more resilient than expected and are already ramping up drilling again. Learn more about top U.S. shale stocks in a recent Industry Snapshot.
The Organization of the Petroleum Exporting Countries reached an agreement last month to cap production at 32.5 million-33 million barrels per day, down from the cartel's daily production of 33.2 million barrels a day at the end of August. Details on who will cut and how much will be decided at OPEC's official meeting in November.
But OPEC members Iran and Iraq will not be attending the meetings in Istanbul this week, sources told Reuters.
Iran had been the stumbling block for prior output agreement at a meeting in Doha in April, as Tehran has been vocal in the past about not agreeing to a freeze until its production rises to presanction levels.
And Iran doesn't look like it will be cutting back production anytime soon. Last week, Tehran signed a $2.2 billion deal that could boost Iran's output to 5.7 million barrels a day by the end of the decade, well above its August production of 3.6 million barrels a day and its stated target of reaching its presanction level of about 4 million.
Iran's not the only country looking to increase production. Iraq has argued that the production numbers used for the deal will leave the country short changed. Nigeria plans to increase production, and Libya is eyeing exports for cash to help fight the Islamic State.