Saudi Arabia and Russia have started bilateral consultations on whether they should start cutting oil production again in 2019, Russian news agency TASS reported on Wednesday, citing an OPEC source familiar with the talks.
The idea to start talking about reducing supply again came from Saudi Arabia, according to TASS’s source, who also noted that the issue would be discussed with Russian oil producers as well.
Russia’s Energy Minister Alexander Novak told reporters in Beijing on Wednesday that he would hold talks with Russian oil companies before the meeting of the Joint Ministerial Monitoring Committee (JMMC) of OPEC and non-OPEC in Abu Dhabi this weekend.
"There is no position yet, we are working at it with our companies," TASS quoted Novak as saying when asked what Russia’s position is ahead of the JMMC meeting on November 11.
Russia will have to look at demand projections for this quarter and for the first quarter next year, and at demand in other countries, Novak said.
According to the Russian energy minister, the oil market is currently 'well balanced', despite the U.S. sanctions on Iran, because the U.S. granted temporary waivers to eight countries to continue importing Iranian oil.
At its previous meeting last month, the JMMC said that its review of the recent market fundamentals showed “a very comfortable supply level relative to demand,” but noted that OPEC and its Russia-led non-OPEC partners in the deal may have to change course in the current relaxing of the cuts, due to increased inventories in recent weeks and uncertainties about the global economy.
This weekend’s JMMC meeting will see the panel discuss the possibility of reducing production again next year, as some members have expressed concern that global oil inventories are rising, delegates told Bloomberg on Wednesday.
Following the reports that a fresh oil production cut may be on the table of negotiations, oil prices—which had been trending lower this week—were up at 08:16 a.m. on Wednesday, before the EIA inventory report. WTI Crude was up 0.9 percent at $62.77 and Brent Crude was trading up 1.22 percent at $73.01.
By Tsvetana Paraskova for Oilprice.com
