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Russia hints producers could ease up on oil output curbs, countering Saudi view

Published 04/20/2018, 06:54 AM
Updated 04/20/2018, 07:01 AM
© Reuters. FILE PHOTO: Russian Energy Minister Alexander Novak attends the Gas Exporting Countries Forum Summit in Santa Cruz

By Rania El Gamal and Marwa Rashad

JEDDAH, Saudi Arabia (Reuters) - OPEC and non-OPEC oil producers could begin easing up on output curbs before the end of the year, Russian Energy Minister Alexander Novak said on Friday, sounding a bearish tone in contrast to Saudi Arabia's bullish stance.

Members of the Organization of the Petroleum Exporting Countries and non-OPEC players led by Russia have reduced output by 1.8 million barrels per day since January 2017 under a deal set to run until the end of this year.

The deal has helped raise oil prices to above $74 a barrel, the highest since November 2014, and reduce inventories in OECD industrialized countries almost back to their five-year moving average.

The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC), which monitors the deal, met on Friday in Jeddah, Saudi Arabia, ahead of an OPEC-led meeting set for Vienna in June.

"The agreement lasts until the end of the year. In June, we can discuss, among other issues, a question about reduction of some quotas during this time, if it is expedient from the market's point of view," Novak said ahead of the JMMC meeting, TASS news agency reported.

Still, sources familiar with the meeting told Reuters that Novak told his OPEC and non-OPEC counterparts in a closed-door meeting that Moscow was committed to the deal on cutting output until the end of 2018.

The OPEC, non-OPEC ministerial panel said OECD commercial oil stock levels were 2.83 billion bbl in March 2018, still above the level seen before the oil market downturn. The panel tasked OPEC's Secretariat to look into different metrics with deep analysis of market uncertainties.

Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, three industry sources said this week, indicating Riyadh will likely seek no changes to the deal in June.

Saudi Arabia's Energy Minister Khalid al-Falih said OPEC and non-OPEC compliance with the output deal reached 149 percent in March. The deal's success has helped relations between Russia and Saudi Arabia. Saudi King Salman made a royal visit to Moscow last year.

© Reuters. FILE PHOTO: Russian Energy Minister Alexander Novak attends the Gas Exporting Countries Forum Summit in Santa Cruz

UAE oil minister Suhail Mohamed Al Mazrouei believes more oil producers need to join OPEC and non-OPEC producers in curbing supply, Germany's Handelsblatt newspaper reported on Friday.

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