Russia's Energy Minister Alexander Novak said yesterday that over the last six months, global crude oil supply has shrunk by 350 million barrels thanks to the production-cutting efforts of OPEC and its partners. Novak was speaking at a meeting of energy ministers in St. Petersburg to track the progress of the oil production cut deal that Russia and a number of other oil producers inked with OPEC late last year in a bid to enable an oil price recovery.
Novak, usually laconic, was a source of good news yesterday. He also told media that the world's reserves of crude oil and petroleum products have now declined for the first time in three years while investments in oil and gas has inched up for the first time since 2014. This, the minister added, will help to avoid a deficit at some point in the future.
A number of analysts as well as industry insider-including the CEO of Aramco-have warned that the oil and gas sector should brace for a shortage resulting from insufficient investments in new production. Novak, however, seems to be quite optimistic about the medium-term future of oil supply.
The St. Petersburg meeting also brought more good news to the market, which was immediately reflected in oil prices. Both Brent and West Texas Intermediate settled with gains of over 1 percent. Related: Energy Equities Hit Hard By Unstable Oil Prices
Nigeria said at the meeting it would stop ramping up its oil output when it hits a daily production rate of 1.8 million barrels, and Saudi Arabia pledged to cap daily exports at 6.6 million barrels from next month. That was the good news. The not-so-good news came yesterday from Iraq, which announced its plans to raise oil output to 5 million barrels daily by the end of the year. Also, Libya seems to have remained exempt from any production cuts for the time being.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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