Putin: OPEC Oil Freeze Is "The Right Decision" - And Saudi Agrees On Condition Of Unanimous Participation

According to the latest wave of reports chronicling the lead-up to the Organization of the Petroleum Exporting Countries' freeze meeting later this month, Russia, Saudi Arabia, and other producers agree that a freeze is needed to help the global market.

In an interview with Bloomberg, Russian president Vladmir Putin said "it would be correct to find some sort of compromise; I am confident everyone understands that.

"We believe that this is the right decision for world energy."

Putin added, "Everyone should do it, including Iran"; however, he conceded that Iran deserves some leeway because "It would be unfair to leave it on this sanctioned level."

Supporting Russia's stance is the country's deputy prime minister Arkady Dvorkovich, who told CNBC at the Ambrosetti Forum on economics in Italy that "We are ready to sign to have a deal; any producing country is not good with a very low oil price."

Speaking at the same forum, Turki Al-Faisal, prince of Saudi Arabia, said his kingdom could agree to some sort of production cap as long as other oil producing nations play along: "All oil producers should have a role in whatever decision is taken ... everybody should play their part," and he added that "what Saudi Arabia is seeking is a holistic approach to the issue of oil production and prices, not just within OPEC."

Half way around the world in Tokyo, Adel al-Jubeir, minister of foreign affairs for Saudi, told delegates at an event that OPEC and non-OPEC oil producers are moving "towards a common position, towards a common effort; if other producers were to agree, it is reasonable to accept Saudi Arabia to go along with it."

While the words look good in print, Bloomberg notes that "Even if a deal is concluded, analysts from Commerzbank AG to Citigroup Inc. warn that simply capping output at current levels -- rather than cutting production -- would do little to tackle the persisting surplus in global markets.

"Besides, most of the countries involved are already producing as much as they can, making a pledge to keep output flat irrelevant, they say."

Plus, members such as Iraq, Libya, and Nigeria in addition to Iran are making concerted efforts to restore their output, which would render any prospect of a deal under the Russian and Saudi conditions dead on arrival.

Perhaps the most plausible reason for the Saudis being amenable to a freeze was voiced last week by OPEC sources, who pointed out that the kingdom needs higher oil prices to maximize the value of its Aramco IPO.