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Putin's oil promise was the easy part, now comes the tricky part

Russian President Vladimir Putin
Sergei Karpukhin | Reuters
Russian President Vladimir Putin

I've said it before and I'll say it again, when it comes to verbal intervention the world's central bankers ain't got nothing on the oil barons.

Once again the heavyweight champs of Russia and Saudi Arabia have swung the oil market north by saying all the right things at the massive World Energy Congress (WEC) event in Istanbul, Turkey.

They have taken the oil price up by well over 10 percent in the space of three weeks by talking a good book. Prices that were circa $46 per barrel for Brent before OPEC's gathering in Algiers last month are now sitting pretty at around $53 per barrel after the latest verbal interventions.

And this is the key point. Not one producer, not one, has willingly taken one solitary barrel off the table this fall. Not OPEC, not Russia, not any other non-OPEC supplier. There are as many barrels in circulation now as there were when crude was languishing in the low $40s. In fact, there are actually more barrels due to the oversupply, more inventories and more cargo loads sitting on tankers waiting to find buyers.

According to the IEA (International Energy Agency), the imbalances won't disappear now until the first half of 2017.

But that is not the point. The oil market, as any market, is driven by expectations of tomorrow and not the economic realities of today and on this point Saudi Arabia and Russia are saying all the right things.

That's not to say it's empty rhetoric, far from it. Listening to Khalid al-Falih, the Saudi oil minister, here in Turkey on Monday he was totally reasonable and measured.

"$60 per barrel is possible", "OPEC needs to be balanced and responsible", "we don't want to give the market the wrong signal", were all part of his speech. Who can argue with any of that?

'Others need to share the pain'

It was the same with the Russian president later in the day during his address at WEC. Vladimir Putin is right surely when he says low prices have hurt investment, could lead to a deficit and hence more volatility.

The carrot though came in the bit where Putin said Russia would be open to joining a proposed OPEC cut if it were to carry it out.

So far so good. The market lapped it up sending oil contacts to recent highs. But what next?

That's the tricky part and everyone knows it. Iraq and Iran need to join the party, others in OPEC will also need to take a quota, or share of the pain, and as we all know, budgets are under severe pressure.

Realistically they need to produce as much as possible to keep at least some revenues going into strained exchequers across the oil producing world.

But that problem is for another day, maybe that day is November 30 at the next formal OPEC meeting in Vienna. For now though let's celebrate the power of the spoken word.

Used in the right way, it is still a mighty instrument.

Steve Sedgwick co-anchors CNBC's flagship program, Squawk Box Europe and is CNBC's OPEC reporter. Follow him @steve_sedgwick

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