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Russia’s Energy Ministry will soon begin talking with domestic oil companies about the option to extend the production cuts beyond June, Energy Minister Alexander Novak said on Tuesday, while Moscow-based analysts largely expect Russia to continue participating in the output cuts that it had agreed to with OPEC.
Speaking to reporters on Tuesday, Novak said that it was still too early to tell if the OPEC/non-OPEC deal should be extended, TASS news agency reports.
However, Russia will be talking soon to its oil companies and to other countries regarding the extension. The decision whether to extend the period of the cuts will depend on what the inventory situation in April will be, and what the forecasts for May and June will be, TASS quoted Novak as saying.
Russia – which has so far cut more than 200,000 bpd out of the promised 300,000-bpd gradual cut – will have reduced its output by 250,000 bpd by mid-April, Novak noted.
A possible extension of the deal is rallying more support, all the more so that oil prices have not jumped considerably, and swelled global inventories have not been drawing down as fast as it had been expected.
According to analysts polled by TASS, Russia is expected to continue taking part in the output cuts, should OPEC decide to extend the deal until the end of the year.
Related: Venezuela Is The Wild Card In The OPEC Deal Extension
“If the agreement is not renewed in any way, oil prices will most likely go down because we will concurrently have production growth in the United States, in OPEC countries, mainly in Saudi Arabia, and production growth in Russia,” Andrei Polischuk, an analyst at Raiffeisenbank, told TASS.
According to analysts, if Russia refuses to join a possible extension, Saudi Arabia will not be willing to take all the burden and “maintain prices at its expense only”.
Experts reckon that oil prices may fall to $40 or even $30 per barrel if the deal is not extended.
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.