A meeting of the Group of Eight industrialised nations in St. Petersburg starting at the weekend could send a signal aimed at calming volatile oil markets, a senior German government source said on Friday.
"I think it would be positive if that were to come out," the source told reporters. "It is indeed conceivable, for example in that Russia is again recognised by others as a reliable source." He said that as a result of the summit, which is expected to focus at Moscow's request on energy policy, Russia would again be recognised by others as a reliable partner and that this would have a calming effect on global oil prices.
Oil surged to record highs above $78 a barrel on Friday as geopolitical storm clouds gathered, with supply disruption in Opec-exporter Nigeria and tensions across the Middle East driving crude into unchartered waters.
Asked whether global imbalances would be mentioned during the summit talks, the source said this was a possibility, but said they would not be discussed in detail.
When asked to clarify what the imbalances were he said:
"The usual things," mentioning the United States' twin deficits, added flexibility in the Chinese currency and the need for further reforms in the European and Japanese economies.
A January price dispute between Russia and Ukraine disrupted gas supplies to Europe, prompting the 25-nation bloc to search for new sources of energy in an attempt to protect its supply. Moscow supplies 25 percent of the European Union's gas, and more than that in Germany's case, but has argued in the past that is needs security of demand in return for secure supplies.
"Ahead of the summit there are significant signs of an easing of these tensions," the source said, noting that Russia was keen to become more involved in the downstream oil business in return for access to upstream activities for foreign firms.
The source added that Germany's Chancellor Angela Merkel would not do anything to unsettle her coalition partners, the Social Democrats, who stand by the nation's decision to phase out nuclear power across the country.
Common ground might be found, the source said, between Berlin's plan to phase out atomic energy and other nations' renewed interest in it if it were stressed that new nuclear power plants were to be built with safety in mind.
The source said that other points of discussion would include the Middle East, Iran, Iraq, Afghanistan and North Korea. There would also be an attempt to give some impetus to the stalled Doha round of global trade negotiations.
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