Russia Inclined To Extend Output Cut Deal With OPEC

Russia is ready to extend the oil cut deal with OPEC and is inclined to believe that an extension is reasonable, TASS news agency quoted Russian Energy Minister Alexander Novak as saying on Thursday.

“Now we are holding final negotiations on this topic with our partners and are inclined to think that extension is reasonable,” Novak said, as carried in English by TASS.

The surplus of commercial reserves is being reduced at a fairly good rate, and reserves in floating storage facilities have been reduced by about half, Novak noted, as quoted by TASS.

The Russian minister praised the signatories to the agreement for their high level of commitment and compliance to the cuts, and noted that oil demand growth was healthy.

Under the deal between OPEC and 11 non-OPEC producers, Russia had to cut output by 300,000 bpd by the end of the first half. Just yesterday, sources from the Energy Ministry told media that Russia had exceeded its assigned quota for crude oil production cuts by 790 barrels a day. Russia hit the 300,000 bpd cut shortly before the end of April.

So far Russia had given its principal support of an extension, but Alexander Novak had not gone into any details besides saying that the support is conditional on consensus within OPEC.

Last week, Saudi Oil Minister Khalid al-Falih said that he would discuss a possible extension with Novak within the next two weeks.

“There seems to be a consensus in that direction, but we’re not 100 percent there,” al-Falih told reporters while on a visit to Azerbaijan, as quoted by Bloomberg. Related: Trump Flirting With The Idea Of A Federal Gasoline Tax Increase

“We still need to talk to all countries. A very important country to talk to, of course, is Russia, the biggest non-OPEC exporter,” al-Falih noted.

Many OPEC countries have hinted that the cuts need to be extended beyond June, and analysts are mostly expecting a rollover until the end of the year.

By Tsvetana Paraskova for Oilprice.com

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