The oversupplied oil market is in desperate need of a rescue — and now there are signs that Saudi Arabia may be coming round to that view too.
A Gulf source told CNN on Thursday that regional players are “willing to do anything to stabilize the market” and “all options are open.”
That includes a potential emergency meeting in February between OPEC and non-OPEC producers like Russia.
The comments suggest a possible shift from Saudi Arabia, the powerful Gulf oil producer in control of deeply-divided OPEC. The Saudis have long resisted dialing back production out of fear of losing market share. But U.S. production is slowing slightly and oil prices have closer to $30 a barrel.
This come just after Russian Energy Minister Alexander Novak on Thursday said OPEC and non-OPEC producers are considering a 5% output cut, according to Russian state news agency TASS. Novak cautioned that it’s “too early” to call anything a concrete agreement.
A spokesperson for Russia’s energy minister told CNN there is no formal date for the meeting or an official invitation yet. However, the spokesperson confirmed there are discussions taking place.
Talk of a coordinated output cut excited the oil markets. Crude oil prices briefly soared 7% on Thursday, trading as high as $36.28 a barrel. But oil prices have since retreated a bit, recently sinking below $35 a barrel.
A coordinated production cut would be a big deal because the market is currently suffering from an epic supply glut. That’s the main reason why oil prices have crashed as much as 75% since mid-2014, sinking as low as $26 a barrel last week.
If realized, a coordinated output cut “would be a step toward establishing a low in the crude oil markets,” said Darin Newsom, senior analyst at DTN.
An output cut would be a big reversal by Saudi Arabia, the undisputed leader of OPEC. Despite the financial pain inflicted by cheap oil, Saudi Arabia has refused to reduce production.