Russian action boosts oil price

Opec is expected to cut output for the fourth time

Russia has offered to cut oil production, adding momentum to the Organisation of Petroleum Exporting Countries' (Opec) campaign for a co-ordinated reduction of global supply.

Russian Prime Minister Mikhail Kasyanov said the country's largest oil companies were proposing a voluntary output cut in a bid to stabilise prices.

I don't see any contention for a cut of 1.5 million barrels a day

Ali al-Naimi
Saudi Oil Minister

Opec, which controls about 40% of the world's oil supply, has been trying to persuade non-members Russia, Norway and Mexico to cut or freeze their production levels for two months.

The cartel has said that it cannot shore up prices alone given the severity of the slump in demand.

The oil price has been steadily falling since the 11 September attacks have worsened the economic slowdown, thus reducing world's demand for fuel.

Earlier this week, the Brent crude oil price hit a two-year low of $18.81.

Russian surprise

"We will agree the companies take this decision themselves and will take it into consideration in the work of the government," Mr Kasyanov said, adding the companies would make the proposal next week.

Ali Rodriguez expects a big cut

But oil producers such as Lukoil, Yukos and Sibneft declined to comment, but were reportedly "surprised".

Russia is the world's third largest producer of crude oil, making up 9% of the world's total production.

The Russian announcement came on the eve of a visit to Moscow by Saudi Oil Minister Ali al-Naimi, Opec's most powerful representative, where he will be joined by his counterparts from Venezuela, Iran and Algeria.

The cartel will meet in Vienna on Wednesday where output is expected to be cut by up to 1.5 million barrels a day.

Russia will attend as an observer.

Saudi support

The Saudi minister gave oil prices a boost when he said he saw no objections for a big output cut to revive the cartel's falling export revenues.

"I don't see any contention for a cut of 1.5 million barrels a day," he told reporters on the sidelines of global climate talks in Marrakesh in Morocco.

Mr Al-Nuaimi said he thought the cuts should be introduced from the beginning of December.

"What's the point of waiting beyond that," he said.

Even less oil

Opec has cut production three times this year, reducing supply by 3.5 million barrels a day, or 19%.

Another cut would leave Opec output at its lowest since 1990.

Before Russia's announcement, the tiny Gulf producer Oman was the only non-Opec member to pledge support for cuts.

In London trade, Brent crude for December delivery ended up $1.10 at $21.38.