OPEC headquarters in Vienna

There is hope on the horizon for crude oil producers as prices rise for the second day, following prospects of a meeting between OPEC nations and Russia.

Russia had sparked the two-day price surge after it announced possibility of a meeting on Wednesday. Today, Russia said  that OPEC’s largest producer Saudi Arabia, had proposed oil production cuts of up to 5 percent in what would be the first global deal in over a decade to help clear a glut of crude and prop up sinking prices.

Benchmark Brent futures jumped as much as 8 percent on Thursday to nearly $36 a barrel on news of the potential deal, which if implemented would immediately reduce surplus global output exceeding demand by 1 million barrels per day (bpd). Brent was trading at $34 a barrel at 1540 GMT.

A turnaround in oil’s fortunes would be welcomed by oil-rich countries where the price collapse has caused budget squeezes and political turmoil with some even forced to devalue their currencies.

Russian Energy Minister Alexander Novak said Saudi Arabia had proposed that oil-producing countries cut production by up to 5 percent, which for non-OPEC member Russia – the world’s top producer – would represent around 500,000 bpd.

“Indeed, these parameters were proposed, to cut production by each country by up to 5 percent,” Novak said. “This is a subject for discussions, it’s too early to talk about.”

Saudi Arabian officials did not immediately comment on the proposal but a senior Gulf OPEC delegate said: “Gulf OPEC countries and Saudi Arabia are willing to cooperate for any action to stabilise the international oil market.”

The proposal did not come directly from Saudi Arabia but rather from OPEC members Venezuela and Algeria, one Gulf OPEC source said.

Oil sank to 12-year lows of around $27 a barrel earlier this month, from as high as $115 some 18 months ago, because of a U.S. shale oil boom and a decision by OPEC to pump more to fight for market share against higher-cost producers.

But cheap oil has caused economic pain in many producer countries. In Saudi Arabia it has pressured the currency and opened up a record state budget deficit of around $100 billion.

In Russia, the rouble hit an all-time low, street protests have flared in Azerbaijan and investors are concerned about a potential debt default by OPEC member Venezuela.

Reported by Reuters