After registering a one-year high, crude prices came down by a dollar in the international market on Tuesday. Cold response from Russian oil industry on production cut is cited as the major reason for the price fall trend.
The new turnaround in the global market casts doubts about the strength of the new production cutting agreement between Saudi Arabia from the part of OPEC and Russia.
Oil prices that jumped by 3 percent on Monday, after the Russia and Saudi Arabia reached a trend-setting deal bringing cooperation between OPEC and non-OPEC producers.
But Brent oil futures fell to $52.84 on Tuesday from $53.73 on the previous day.
The International Energy Agency also raised doubt about how quickly the OPEC can reach production cutting consensus with Russia. Heads of Russia’s biggest oil companies also disagreed with production cut as it may burden them financially.
Igor Sechin, Russia’s most influential oil executive, and the head Rosneft, said his company will not cut oil production as part of the agreement with OPEC.
Market observers point out that higher production by Iraq, Libiya and few other small producers may undermine the new agreement. Markets also should be convinced about the effectiveness of the deal as the general mood is of surplus.