Oil rises as US and Russia look to combat Saudi pricing strategy

Oil rose on Tuesday after signs emerged of possible Russian and the US cooperation to stabilise prices after the crashed to their lowest level in 17 years, in part due to Saudi efforts to control the market.

Brent crude rose on Tuesday morning to $23.37 a barrel after closing on Monday at $22.76 - the lowest level since 2002.

The price drop is related to a supply glut, due to the impact of the coronavirus on global economies and Saudi Arabia and other Gulf states increasing production.

The ramping up of supplies from the Gulf has seen a barrel of oil tumble below the $20 mark, with producers in North America likely to be bankrupted by sustained low prices.

The threat of US producers going under has put pressure on Washington to act and an agreement with major producer, Russia, could be one way of achieving stabilising prices.

— Eye on Tunisia (@EyeonTunisia) March 24, 2020" style="color:#fff;" class="twitter-post-link" target="_blank">Twitter Post #Tunisia Coronavirus exposes vulnerable GCC markets to a glimpse of post-oil reality #ALAraby https://t.co/5fg57MzWEX — Eye on Tunisia (@EyeonTunisia) March 24, 2020

The Kremlim said on Monday that presidents Vladimir Putin and Donald Trump had talked by phone about the crisis.

"Opinions on the current state of global oil markets were exchanged. It was agreed there would be Russo-American consultations about this through the ministers of energy," the Kremlin said in a statement, according to TheStar.com. The US energy department said that secretary Dan Brouillette will speak with his Russian counterpart Alexander Novak about "ways the world's largest producers can address volatility in the global oil markets".

Russia has also spoken about the need to stabilise the market after the huge drop in prices. Some analysts believe that Saudi Arabia ramped up oil to allow Riyadh to dominate the market again, at the expense of Russia.

Saudi Arabia said on Monday it will raise its oil exports to a record 10.6 million barrels per day starting from May despite a global supply glut, escalating a price war with Russia.