Russia's oil production hits 25-year high

Russia's oil production hits 25-year high

Slower second quarter growth in the European economy, coupled with a more measured look at production rumors, brought oil prices lower early Tuesday.

"I don't see a fundamental justification for prices above $50" a barrel, said Hamza Khan, head of commodity strategy at ING Bank, who forecasts that prices will hover around $40 this year and next.

Crude oil prices climbed more than 1% on Wednesday, after the news of a possible deal on output freeze between the world's top oil producers' edges closer to completion.

Oil futures settled on a mixed note Tuesday, with West Texas Intermediate crude ending at a one-week high and Brent crude finishing with a loss as traders eyed a pact between the world's two largest crude producers, Russian Federation and Saudi Arabia, aimed at stabilizing the market. "Iran wants a stable market and therefore any measure that helps the stabilisation of the oil market is supported by Iran", said Mr Zanganeh. US crude, meanwhile, rose 39 cents, or 0.9 percent from Friday's settlement, to $44.83 per barrel.

The National Iranian Oil Company's (NIOC) director for global affairs told CNBC Wednesday Iran's oil output had reached 3.8 million barrels per day (MMBPD) and it would increase production.

On Monday, Saudi Arabia and non-Opec member Russian Federation signed a pact to co-operate to stabilise markets, saying they could agree to freeze output in the future.

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On the other hand, the Brent crude futures for November delivery was trading at $47.30 per barrel-a drop of ~0.69%.

Russia's oil output is hovering near a post-Soviet high while Saudi Arabia's reached a record high in July. It now produces around 3.6 million barrels a day.

Saudi Arabia's Foreign Minister Adel al-Jubeir had said on Tuesday it would go along with a freeze in oil output if other producers agreed one but cautioned that Iran, which is aiming to raise output to pre-sanction levels, could foil any attempt to limit output.

"If we could not do that and accept one system - which is to use secondary sources - it would complicate things further", the source said.

Iran said it would cooperate on the freeze once its output returned to 4 million barrels per day before sanctions, a level that could be reached within two or three months.

OPEC and non-OPEC oil producing nations (including Russia) are scheduled to meet at the end of this month in Algeria, but few market watchers expect a deal to materialize.

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