A supply deal between OPEC, Russia and other producers, a group known as OPEC+, that had propped up oil prices for three years collapsed in March, while the coronavirus hammered demand.
Riyadh and Moscow blamed each other for the failure and launched a battle for market share, sending oil prices to their lowest in two decades that has strained budgets of oil producing nations and hurt higher-cost producers in the United States.
U.S. President Donald Trump said last week he had brokered a deal with Moscow and Riyadh. But initial plans for an OPEC+ meeting on Monday were delayed, with two OPEC sources saying a video conference would now be held at 1400 GMT on Thursday.
“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,” Kirill Dmitriev, one of Moscow’s top oil negotiators who also heads Russian’s sovereign wealth fund, told CNBC.
Dmitriev was the first to make a public declaration last month about the need for an enlarged supply pact, potentially involving producers outside the OPEC+ group.
Trump has said a deal could see cuts of 10% to 15% of global supply, although analysts say even such a huge reduction would still not solve the immediate problem of oversupply which by some estimates has crashed by 20% to 30%.
Russia and Saudi Arabia have long been frustrated that curbs by the Organization of the Petroleum Exporting Countries and others have left a gap that has been filled by shale oil firms in the United States, which became the world’s biggest producer.
Producers also differ over the level from which they should make any output cuts. Riyadh, with by far the world’s biggest reserve of extra capacity, has insisted it will no longer carry what it considers an unfair burden of cuts.
Russia President Vladimir Putin has said the base should be production levels in the first quarter.
In its race for secure a bigger share of the market after the OPEC+ deal fell apart, Saudi Arabia raised its crude output to 12.3 million bpd on April 1 and said it planned to export to more than 10 million bpd starting from April.
An OPEC source said the base was “negotiable”, adding every producer faced the same threat that the world’s oil storage capacity was fast reaching a limit.
“The cliff is visible to everyone,” the source added.
OPEC member Iraq said on Sunday any new deal needed support from major producers from outside OPEC+, such as the United States, Canada and Norway.
Antitrust laws prohibit oil producers in the United States from taking steps to push up oil prices. But curbing output would be legal if state regulators or the federal government set lower production levels, antitrust experts said.
The U.S. authorities have yet to indicate what, if any, action it might take. Trump said on Sunday he could slap “very substantial tariffs” on oil imports if prices stayed low, but he also said he did not expect this would be needed.
In rare moves, Canada and Norway have signalled their willingness to curtail production.
After Thursday’s scheduled OPEC+ talks, G20 energy ministers and members of some other international organisations will hold a video conference, hosted by Saudi Arabia, on Friday, a senior Russian source told Reuters, as part of the efforts to get the United States involved in a new deal on production cuts.