It would make sense for the OPEC+ coalition of oil producers to begin monitoring the group's market share to measure how effective the OPEC+ actions are, Russian Energy Minister Alexander Novak told news agency Interfax in an interview published on Wednesday.
Asked to comment on an idea of Gazprom Neft's chief executive Alexander Dyukov that OPEC+ should switch its gauge for effectiveness of the deal by looking into the market shares of the countries part of the coalition, Novak said:
"Generally, it will be necessary to track indicators such as inventories, supply, and demand, but then it also makes sense to switch to targeting market share which belongs to OPEC+ considering the rise in global demand."
Oil executives in Russia, including Igor Sechin, the boss of the biggest oil producer Rosneft, have often criticized the OPEC+ pact, which began its efforts to fix the market and prop up prices in January 2017. Russian firms have argued that the OPEC+ cuts only serve to prop up U.S. shale production with higher oil prices, giving America more share on the global market at the expense of Russia and its OPEC allies in the OPEC+ deal. Many analysts saw Moscow's refusal in early March to back a collective 1.5-million-bpd cut from all OPEC+ members as the end of the Russian patience in propping up U.S. shale.
The month-long spat between Russia and OPEC's leader and largest producer, Saudi Arabia, combined with the crashing global demand in the pandemic to force oil prices so low that not a single U.S. oil producer is comfortable with current prices. The U.S. shale patch is slashing capex and production to cope with the very low prices.
But oil prices and demand at these levels aren't comfortable for neither Russia nor the Saudis, either. This made Russia and its now-friend-again Saudi Arabia sit down and hammer out a new OPEC+ deal to cut 9.7 million bpd production in May and June.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More