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Oil rises as Venezuela's Maduro says production freeze deal is 'close'

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Oil rises as Venezuela's Maduro says production freeze deal is 'close'

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Oil prices jumped on Monday after Venezuela’s President Nicolas Maduro said OPEC and non-OPEC countries are close to reaching a deal to stabilise markets.

Maduro was speaking after discussing the issue with leaders from Iran and Ecuador at the Summit of the Non-Aligned Movement.

Maduro said an agreement could be announced this month.

“We had a long bilateral meeting with Rouhani. We’re close to a deal between OPEC producer countries and non-OPEC,” Maduro told a news conference.

Iranian President Hassan Rouhani, who attended the summit, said Tehran supported any move to stabilise the global oil market and lift prices, according to the Iranian Oil Ministry news agency, SHANA.

OPEC members and Russia are due to hold an informal gathering in Algeria at the end of September to talk about freezing oil production levels.

Venezuela – which has often said a deal is close – is desperate for that as its state-led economy has been badly hit by low oil prices caused by more supply than demand.

“Low probability”

Independent market analyst Jeremy Batstone-Carr was not hopeful.

“We have been here so many times, expectations for some form of deal have done the rounds in anticipation of key oil minister meetings and they just haven’t come to anything so I think that the markets’ expectation has been lowered which clearly means that if a deal were to be struck the reaction in the oil markets and across financial markets oil price expectations generally would indeed be very significant, the fact that we are not seeing a very significant move suggests to me that markets are placing a very low probability on a form of deal being reached between OPEC and Russia,” Batstone-Carr told Reuters.

Last week, benchmark Brent crude hit a two-week low and US light crude fell to a five-week low on concerns about oversupply with increased production by Libya and Nigeria.

Part of the price rise on Monday was because clashes in Libya have again disrupted attempts to boost its exports.

10 percent fall needed

Global oil supply of 94 million barrels per day needs to fall by about a tenth if it is to match consumption, Venezuela’s Oil Minister Eulogio Del Pino said on Monday.

Del Pino said a “fair price” would be around $70 per barrel.

“Global production is at 94 million barrels per day, of which we need to go down nine million barrels per day to sustain the level of consumption,” he said in an interview with state oil company PDVSA’s internal TV station.

Del Pino is also president of PDVSA.

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