Breaking News
0

Russia Says OPEC+ to Discuss Gradual Easing of Cuts in June

CommoditiesMay 24, 2018 08:00PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Bloomberg. Alexander Novak, Russia's energy minister. Photographer: Simon Dawson/Bloomberg 2/2

(Bloomberg) -- Russia will discuss with OPEC in June whether it’s appropriate to gradually scale back oil-output cuts, Energy Minister Alexander Novak said, reiterating that any decision must be guided by the state of the market.

As the minister spoke to reporters at the St. Petersburg International Economic Forum on Thursday, some of Russia’s largest oil producers called for more flexibility after almost 17 months of output curbs. The cuts have achieved their goal and crude prices near $80 a barrel are high enough, said the bosses of Lukoil PJSC and Gazprom (MCX:GAZP) Neft PJSC.

The Organization of Petroleum Exporting Countries and its allies have eliminated the oil-inventory surplus that’s weighed on prices since 2014. Even so, they indicated last month that supply curbs should continue as planned until the end of the year. That position has been complicated by renewed U.S. sanctions on Iran and Venezuela’s collapsing oil industry, which threaten to tighten a market where crude is already trading near a three-year high.

“We’ve been repeatedly saying” that all decisions on the future of the deal should depend on the market situation, Novak said. OPEC and its partners will definitely discuss in Vienna next month the possibility of a gradual output recovery, he said.

For the first time in more than five years, Saudi Arabia and other oil producers are feeling the political pressure from consuming nations. U.S. President Donald Trump directed his ire against OPEC last month, saying in a tweet that "oil prices are artificially Very High! No good and will not be accepted!"

Gasoline Costs

In Washington, Democrats are using high gasoline prices, approaching $3 a gallon for the first time since 2014, as a political tool, accusing the White House of not doing enough to shield consumers. In developing countries from Brazil to the Philippines, drivers are complaining about high prices.

After Trump decided on May 8 to reimpose sanctions on Iran’s oil exports, Saudi Energy Minister Khalid Al-Falih assured the market that major producers would work to ensure stability and “mitigate the effects of any supply shortages.” Yet the kingdom has also shown a desire for higher prices to bankroll domestic economic reforms and underpin the valuation of its state oil company in a planned initial public offering.

Oil extended its decline in London after Novak’s comments on Thursday, falling 1 percent to $79.04 a barrel at 4:30 p.m. After briefly rising above $80 on Tuesday, Brent crude has weakened amid speculation that OPEC and its allies could agree to slightly dial back production cuts, which have been deeper than planned for several months due to losses in Venezuela.

“They’d like to keep the pact together, so there will be some kind of agreement to increase when it’s needed,” Torbjorn Tornqvist, chief executive officer of oil trader Gunvor Group, said in an interview in St. Petersburg. While the market is “relatively balanced,” there are a “tight couple of months ahead,” he said.

Ministerial Meeting

Novak is scheduled to meet this week with his Saudi counterpart and with United Arab Emirates Energy Minister Suhail Al Mazrouei -- who currently holds the position of OPEC president. Next week or the week after, the Russian minister plans to meet oil bosses to discuss the deal.

There’s scope for Russia to continue its agreement with OPEC beyond 2018, but “flexibility” must be built into the accord, Lukoil CEO Vagit Alekperov said at a briefing in St. Petersburg.

“We shouldn’t breach the deal but it should become more flexible -- follow the market movements,” Alekperov said. “The market has rebalanced” and $80 a barrel is “already high enough.”

Gazprom Neft CEO Alexander Dyukov said in an interview that it would be “right for the deal participants to increase production quotas” to avoid overheating the market.

(Updates with comments from Gunvor CEO in ninth paragraph.)

Russia Says OPEC+ to Discuss Gradual Easing of Cuts in June
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email