LOUISVILLE, KENTUCKY: A sign shows the price of gas at a gas station as the national average falls under $2 per gallon amid the coronavirus pandemic in Louisville, Kentucky. Saudi Arabia and Russia are “very, very close” to a deal on oil production cuts, Kirill Dmitriev, head of Russia’s sovereign wealth fund, told CNBC yesterday. – AFP

MOSCOW: Saudi Arabia and Russia are “very, very close” to a deal on oil production cuts, Kirill Dmitriev, head of Russia’s sovereign wealth fund, told CNBC yesterday. “I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close,” Dmitriev, who is also one of Moscow’s top negotiators, told CNBC.

Dmitriev was first to make a public declaration of the need for an enlarged supply pact, potentially involving producers outside the OPEC+ group that currently consists of the Organization of Petroleum Exporting Countries (OPEC) and some other oil producers led by Moscow. A previous three-year deal to stabilize oil prices collapsed a month ago, with Saudi Arabia and Russia blaming each other for failure to find a compromise at an OPEC+ meeting in Vienna on March 6.

Saudi Arabia and Russia were initially set to meet yesterday to discuss output cuts, but that has now been pushed back to April 9, as oil prices continue to come under pressure. G20 energy ministers and members of some other international organizations will hold a video conference to be hosted by Saudi Arabia on April 10, a senior Russian source told Reuters yesterday, as part of the efforts to get the United States involved in a new deal on production cuts.

Meanwhile, oil prices fell sharply yesterday after a meeting to discuss output cuts between OPEC and its allies was delayed, dimming hopes of swift action to support coronavirus-ravaged energy markets. US benchmark West Texas Intermediate plunged eight percent at the open in Asia but clawed back some ground and was trading 5.7 percent lower, at $26.72 a barrel. International benchmark Brent crude was down 4.3 percent to trade at $32.64 per barrel.

Oil prices have tumbled to levels not seen for years due to the coronavirus pandemic and a price war between Russia and Saudi Arabia, the kingpin of exporting group OPEC. Business shutdowns, travel restrictions and other measures put in place to contain the virus outbreak have battered demand. Prices had bounced back from 18-year lows last week after US President Donald Trump said that Riyadh and Moscow would draw a line under their dispute and agree to major output cuts.

But analysts had been sceptical about a quick resolution, and doubts only grew when the meeting between OPEC and its allies, including Russia, was delayed. They had been expected to meet via video conference to discuss oil production cuts on Monday but the meeting has been postponed to Thursday, the government of energy-rich Azerbaijan said at the weekend.

Trump surprised investors last week by tweeting: “I expect & hope” Riyadh and Moscow will be cutting back “approximately 10 million barrels, and maybe substantially more”. On Friday, Moscow said it was prepared to discuss a reduction in the volume of about 10 million barrels a day.

But Stephen Innes, chief global markets strategist at AxiCorp, said that “traders remain extremely skeptical a deal will be forthcoming, and if one does occur, it will be woefully insufficient to stem the oil supply gushers.” -Agencies