Last week, it only needed Russia and OPEC to mention the possibility of talks to cut crude oil production for both WTI and Brent to surge higher by 25%.
This is the first time since the crude oil entered this long and severe down trend that the titans of oil sector Russia and Saudi Arabia have entertained rumours that production ceilings are to be introduced.
Both the Russia and Saudi Arabian governments are heavily reliant on the revenues from crude oil exports to balance their budgets and finance large public sectors.
It would appear that the talk about talks is a sign that both these major crude oil exporting nations are looking to broker a deal that will limit the excess production that has been the catalyst that has driven prices lower.
If it only took rumours of an agreement between Russian and OPEC to send crude oil spiking higher, the potential for a February disappointment when the main players meet could also have damaging implications for the price of oil.
There would need to be a production cut of around 5% which equates to one million barrels per day. Such a cut in production across both OPEC and non-OPEC would eliminate the current daily overhang and could eventually lead to the elusive bottom being placed under current price falls.
The noise is increasing from both OPEC and non-OPEC nations over the need to discuss quotas, how seriously should we take comments from Saudi and Russian officials that production quotas will be introduced?
With so much speculation surrounding the exact level at which crude oil price will bottom out, the increased chatter from the oil sector’s biggest players will only add to the market volatility.
The problem with crude oil production is that this precious commodity has always had a geopolitical importance. Russia, Saudi Arabia and Iran will have to get over their mutual distrust and put aside the competition for geostrategic dominance over Iraq, Syria and Yemen if a deal is to be struck.
It is very difficult to see how at the present time these countries can agree on crude oil production quotas when the political separation continues to be great and widening.