Saudi- Shuttle diplomacy heats up ahead of Crucial Vienna talks

(MENAFN- Arab News) VIENNA: Saudi Arabia met fellow OPEC member Venezuela and oil powers Russia and Mexico in Vienna as some of the world's largest crude producers engaged in last-minute shuttle diplomacy in a bid to convince Riyadh to support prices.

Saudi Arabia has kept the market guessing about its response to crude's near 30 percent drop since June but ahead of OPEC's meeting on Thursday has shown willingness to talk with rival producers including non-members Russia and Mexico.

'We are going to discuss the market situation and some coordination' Venezuelan Foreign Minister Rafael Ramirez said.

'The most important thing is we are talking' Ramirez who until recently was oil minister and president of state oil company PDVSA added.

Mexican Energy Minister Pedro Joaquin Coldwell told reporters as he left the meeting that a statement would be made 'soon' without clarifying whether it would be a joint statement from all participants.

Igor Sechin the head of Russian state oil company Rosneft and a close ally of President Vladimir Putin arrived in Vienna on Tuesday amid hints that Moscow could cut output or exports if the producer group did the same. Russian Energy Minister Alexander Novak also attended the four-country meeting.

Oil market watchers are divided on the outcome of OPEC's Thursday meeting in the Austrian capital. Predictions range from a large production cut to revive prices to a small reduction or none at all.

Current prices are far below what most OPEC members and rival producers such as Russia need to balance their budgets but the group has struggled to adapt to growing supplies from the US shale boom that have hammered prices to four-year lows below $80 a barrel.

Some analysts say an OPEC cut of as much as 1.5 million barrels per day (bpd) is needed to support oil prices and avoid increasing a supply glut in the first half of 2015.

Algerian Energy Minister Youcef Yousfi told the official APS news agency on Tuesday that OPEC would seek a 'consensual step' to try to bring stability to the oil market without giving further details.

Diplomatic and market sources say Saudi officials told briefings in recent months that the Kingdom with its large currency reserves was prepared to withstand oil prices as low as $70-$80 per barrel for up to a year.

When Petroleum and Mineral Resources Minister Ali Al-Naimi spoke earlier this month after weeks of silence he said Riyadh's desire for stable markets had not changed but gave no clue about his potential response.

'Although the objectives of the cartel are unclear today' analysts from Barclays wrote 'what is apparent is that investors and companies are being shocked out of the $100 per barrel oil comfort range of the last four years and that volatility looks set to remain a feature in 2015.'

In Vienna on Monday and Tuesday Al-Naimi brushed off reporters' questions about oil prices and surplus supplies. 'This is not the first time the market is oversupplied' he said.

Russia's Kommersant newspaper cited sources on Monday as saying Russia might suggest cutting its oil production by around 300000 bpd from next year and that Moscow expected OPEC to limit its output by another 1.4 million bpd.