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[LONDON] Oil rallied by up to five per cent on Monday as top global producers Russia and Saudi Arabia vowed to stabilise the market after meeting at the G20 in China.
Saudi Energy Minister Khaled Al-Falih and his Russian counterpart Alexander Novak agreed to "act together" to steady the market, on the sidelines of the G20 summit in the eastern Chinese city of Hangzhou.
In reaction, Brent North Sea crude leapt as high as US$49.40 per barrel, and US benchmark West Texas Intermediate (WTI) soared to US$46.53.
Prices later pulled back however as Saudi Arabia ruled out the need to trim back production, while traders questioned whether the pair would curb global oversupply.
The two nations "noted the particular importance of constructive dialogue and close cooperation between the largest oil-producing countries with the goal of supporting the stability of the oil market," the ministers said in a joint statement.
"To this end the ministers agreed to act together or in cooperation with other oil producers," it read, adding they had agreed to set up a "joint monitoring group" to offer recommendations to prevent price fluctuations.
Mr Novak described the announcement as marking a "new era" in cooperation between Russia and Saudi Arabia and insisted that it would have a "critical significance".
However, there were no details on any deal to freeze oil output around current levels, just weeks before Moscow and the 13-nation Organization of the Petroleum Exporting Countries (Opec) crude cartel meet in Algeria to discuss a global supply glut.
Thus far, major oil producers have been unable to strike an accord on freezing output, owing mainly to a dispute between Saudi Arabia and Iran over Tehran's desire to raise production levels after the lifting of sanctions.
After meeting Mr Novak, Mr Falih told Al-Arabiya television channel there was "currently no need to freeze production".
"A freeze is one of the preferred options but it is not needed for the moment." Opec members Kuwait, Nigeria and the United Arab Emirates all welcomed the Saudi-Russian pledge.
Kuwait "backs the outcome of these consultations for the sake of achieving a balance in the markets", acting oil minister Anas al-Saleh said.
Emirati Energy Minister Suhail al-Mazrouei hailed the "positive step".
Nigerian Petroleum Minister of State Emmanuel Kachikwu added it was "good news" that "should help firm the price" if both sides agree to a "strong level of discipline in terms of production".
Opec and Russia together account for about half of the world's oil output.
President Vladimir Putin had met Saudi Deputy Crown Prince Mohammed bin Salman in China on Sunday - and vowed to address a global glut and overproduction that has hammered prices for two years.
Mr Putin, speaking at a closing G20 news conference on Monday, repeated his call that Iran should be allowed to return to pre-sanction production - a key sticking point with Saudi Arabia - and also appealed for a "fair" crude price that "could be a bit higher".
Mr Putin - whose economy slumped into recession on the back of oil price falls - has already stated that an output freeze would be "the right decision" and called for "compromise".
Around 1645 GMT, prices had tempered their gains somewhat.
Brent for November delivery stood at US$47.49 a barrel, up 66 US cents from Friday's close. WTI for October was 75 US cents higher at US$45.19.
"There were no... immediate indications that this (deal) will lead to lower oil output," FXTM analyst Jameel Ahmad told AFP.
"If there is no agreement to change output, or at least remove the excessive oversupply in the markets then the same oversupply will continue to weigh on investor sentiment - and this has ultimately led to oil retracing nearly half its gains already."
The oil market has been plagued by a stubborn supply glut that saw prices crash to near 13-year lows below US$30 at the start of 2016.
While it has recovered recently, the price is still well off highs of above US$100 seen in mid-2014.