Amid record-high U.S. crude oil…
A drop in steel demand…
As OPEC and non-OPEC producers seem to move closer to a consensus over extending the output cut deal beyond June, Saudi Oil Minister Khalid al-Falih will talk a possible extension with Russian Energy Minister Alexander Novak within the next two weeks and may discuss some of the issues on the phone as early as this week, Falih said on Wednesday.
“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.
“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.
Novak and al-Falih would aim to reach some decision “that everybody has to support”, according to al-Falih.
Initial enthusiasm over OPEC’s boasting record compliance rate and assurance that the oil market would soon rebalance thanks to the output cuts has faded, as it has become evident that global oversupply is still large.
Although Russia has signaled it may be weighing a possible cut extension, it has not officially committed to joining a rollover of the cuts by the end of the year.
Some Russian government officials have reportedly said that the country’s oil production could rise to the highest in 30 years in 2017 if the extension agreement falls through.
For now, Russia has given its broad support for an extension, although the only specific that has come from Novak so far was a comment made in March stating that it is too early to discuss the issue. 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, Novak has said.
Related: Saudi Arabia Thwarts Attempted Attack On Aramco Facility
However, a possible extension of the cuts would coincide with the Russian summer when production is typically rising, and Moscow agreeing to cut output at that time is not as easy.
The final decision whether to roll over the cuts is expected to be made at an OPEC meeting in Vienna on May 25.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.