Russia says it is not only considering cutting oil production, but is also mulling OPEC membership. President Medvedev says Russia is ready for the step and it could help put a floor under prices.

“We are ready for it. We must protect ourselves. This is our income base, in both oil and gas. These protective measures may be associated with reducing oil production as well as with the participation of suppliers in certain organisations, and with participation in new organisations, if we manage to come to an agreement, so to say”.

Crude prices have rebounded strongly on the Presidents comment and others from Saudi Arabia calling for a serious cut when OPEC next meets in Algeria.  After languishing near $40 BBL earlier in the week Thursday has seen it trading in the $46-$48 BBL range.

Russian oil companies have already mentioned they're expecting a sharp cut, which could drive prices back into the 60 to 80 US dollar band. With the World Bank issuing a gloomy demand outlook this week, Leonid Fedun, Vice President of Lukoil said coordinated action was necessary to halt the slide,

“To revise the downward trend on the oil market, OPEC and Russia have to jointly cut oil output by some three million barrels a day,”

Fedun added that if there are no agreements reached on production cuts downward pressure on the price will continue and oil companies will face a tough time in 2009.

“The market will definitely react to it, it has risen about 5 per cent just on expectations. If there will be no cut, the next year will be difficult for us.”