(Bloomberg) -- Russia said it will take a wait and see approach on whether to extend OPEC+ output cuts because the market has achieved a fragile balance, contrasting with Saudi Arabia’s view there’s still more to be done to restore oil market fundamentals.
“Currently, the price is acceptable to all the parties, both to consumers and producers, and you can see that the level of volatility is extremely low,” Russia’s Energy Minister Alexander Novak said in an interview with Bloomberg TV late Sunday in Baku, Azerbaijan. “We may be balanced today but we don’t know what’s going to happen.”
Uncertainties, including fluctuations in Venezuelan production, make it difficult to say what steps the Organization of Petroleum Exporting Countries and its allies should take in the second half of the year when the current deal expires, Novak said after a day of bilateral discussions with his OPEC+ counterparts.
Russia thinks a decision on whether to extend cuts should be made by May or June, Novak said at a briefing Sunday. That’s a more relaxed stance than that of Saudi Arabia, the de-facto OPEC leader. The Kingdom’s Energy Minister Khalid al-Falih said at the briefing the job of stabilizing the oil market is “nowhere near complete” and OPEC+ needs to “stay the course” until June.
Goal Within Reach
April will be the first full month this year when Russia will show steady average reductions of 228,000 barrels a day, in full compliance with the OPEC+ pact, Novak said. The group’s monitoring committee meets Monday.
So far in March, Russia’s producers have cut their output by some 140,000-150,000 barrels a day from the October baseline in the agreement, he told reporters in Baku, according to newswire Interfax.
Russia last week was roughly halfway toward meeting the pledged output reductions, Bloomberg calculations show. The nation’s oil companies cut their production by some 111,000 barrels a day from October, according to the calculation based on data from the ministry’s CDU-TEK unit.
The energy ministry’s barrel-a-day figures may differ from Bloomberg calculations due to methodology. While Bloomberg applies a ratio of 7.33 barrels per ton, the ministry uses an individual ratio for each field.
