OPEC and non-OPEC producers could reconsider the size of the production cuts they agreed in December 2016 and "ease the cuts," Russia’s Energy Minister Alexander Novak told TASS during today’s meeting of the partners in Jeddah.
"We will monitor the market situation over the next two months, Novak said, "and we will assess it when we meet again in June. The deal will continue until the end of the year but in June we might discuss the question of reducing the cut quotas over that period."
Once again, the Russian Energy Minister is providing some counter-pressure to its partner Saudi Arabia’s upbeat attitude about the future of the cut deal by hinting that not everything is set in stone, and that the cuts might not continue indefinitely regardless of how much Riyadh wants higher oil prices.
For Russia, higher oil prices would be a double-edged sword: on the one hand, they would boost revenues, but on the other, they would dampen demand and hurt exports and market share. His latest comments could dent oil’s latest gains although the general mood continues to be positive, with Novak saying that the global inventory overhang had shrunk to 12 million barrels as of the end of March.
As for the extension of the cuts, Novak said that the partners in the deal were discussing the future format of their partnership, making a point of noting that this format will not necessarily include an extension of the cuts. "It [the partnership] could come down to monitoring the situation in the form of two meetings every year."
Meanwhile, the UAE’s oil minister, Suhail al-Mazrouei, said the deal needed more participants both from OPEC and outside the cartel. In an interview with German Handelsblatt, Al-Mazrouei said, "OPEC members and non-OPEC producers over-delivered on the supply cuts they promised... But we must include further countries in the pact."
By Irina Slav for Oilprice.com
