©AFP

The head of Kremlin-backed oil major Rosneft said on Tuesday that low prices will not last, as the price of Brent crude climbed to a fresh high for the year.

Igor Sechin, a close ally of Russian president Vladimir Putin and the head of Rosneft, told the FT Commodities Global Summit in Lausanne that a price of at least $50 a barrel was needed to avert future supply shortages.

“The oil price is growing. I think everyone is expecting the successful outcome of our work,” Mr Sechin said. “We will need higher price levels than $45 or even $50 a barrel.”

Russia is set to meet next week in Doha with Opec kingpin Saudi Arabia and other big oil producers to discuss an output “freeze” — the first significant concerted action to reverse a near two-year old price collapse. Mr Sechin did not directly address the meeting in Doha but said there were signs already that the market is tightening as US output declines.

“US tight oil is decreasing despite preferential tax treatment,” Mr Sechin said. “Shale oil will struggle to spread as they don’t have such favourable conditions as the Americans have.”

Ahead of the Doha meeting, crude oil has risen, with momentum accelerating on Tuesday as Brent crude jumped 1.5 per cent and set a new high of $43.58 a barrel for 2016. The benchmark has risen from a low of $37.27 a week ago on hopes of a production freeze deal being agreed, but remains well shy of the $115 a barrel peak in mid-June 2014.

Also weighing in on the need for a production freeze was the head of Iraq’s state oil selling company at the FT conference. Falah Alamri, director-general of the oil marketing company of Iraq, said: “They should do this deal as this is the only way to support the oil price.”

He added: “Everybody needs it and Iraq supports this deal.”

The meeting in Qatar will bring together countries from de facto Opec leader Saudi Arabia to Russia and Venezuela to try to freeze output in a bid to hasten the end of an oil glut.

“Demand is increasing and supply is decreasing as American shale oil especially is falling. The timing is right. A deal would now be effective,” said Mr Alamri, who is part of the Iraqi delegation going to Doha.

His comments come even as Goldman Sachs, an influential bank in the commodities market, and other market analysts warn the meeting could fail to tighten an oversupplied market.

A sticking point among producer nations has been Iran’s participation in any deal as well as the level at which production should be frozen. “The details are still up for debate,” Mr Alamri said.

He said Iran has the “right” to increase production to pre-sanctions levels.

Iraq is pushing for a freeze at January levels. Data show the country, which has been the main source of output growth over the past two years, pumped 4.5m barrels a day — a historically high rate.

Saudi Arabia’s deputy crown prince in recent weeks has cast doubt on the kingdom’s involvement saying it would only take part if its regional rival Iran also complied.

Tehran has repeatedly said it will not restrain its production as it recovers from years of sanctions against its oil industry.

However, a senior Opec delegate said last month that the compliance of Saudi Arabia, the cartel’s largest producer, was not contingent on Iran.