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Russia: Current Oil Market Deficit Is 1 Million Bpd

Russia estimates that the global oil market is currently in a deficit of around 1 million barrels per day (bpd), Deputy Prime Minister Alexander Novak said on Wednesday.

“There is a deficit on the market of around 1 million bpd and we need to consider how we can meet the growth in demand,” Novak told reporters in Russia, as carried by news agency TASS.

Last week, Novak said that the oil market was fairly balanced, with demand slightly exceeding supply.

“There is definitely a deficit on the market, that’s why oil stocks from last year are drawing down toward the five-year average,” the deputy prime minister told reporters last week.

Russia, as OPEC’s key partner in the OPEC+ production deal, is ramping up its oil production between May and July, as per the group’s agreement to gradually return over 1 million bpd to the market between May and July. Saudi Arabia will also reverse its extra unilateral cut of 1 million bpd in that period.

The monthly meeting of the ministers of the OPEC+ alliance to take stock of the market situation and compliance rates is scheduled to take place next week, on June 1.

OPEC+ bears in mind the possibility of a return of Iranian oil to the market in the short term, Novak said today.

Iran has the potential for recovery, and the alliance will need to calculate the balance of demand and supply considering Iran, when and if sanctions are lifted, Russia’s top oil policy diplomat said.

Indirect talks between the U.S. and Iran and talks with the countries part of the Iranian nuclear deal resumed in Vienna on Tuesday. Mikhail Ulyanov, who leads the Russian delegation at the talks, said on Tuesday that “The Joint Commission opened today the fifth and probably final round of the Vienna talks on restoration of the JCPOA.”

“The participants expressed readiness to do their best to resolve the remaining outstanding issues and to complete negotiations successfully as soon as possible,” Ulyanov added.

By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on May 26 2021 said:
    If Russia’s estimates are right, then Brent crude oil price could be expected to hit $70 a barrel much earlier than expected rising to $70-$80 in the third quarter of 2021.

    We may never see a lifting of US sanctions on Iran even by 2023 or ever. The reason is that the positions of the United States and Iran are irreconcilable. Therefore, the possibility of a return of Iran to the market is very remote.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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