Exit strategy for global cuts to be discussed before June

Kuwait’s oil minister Essam al-Marzouq said on Sunday that the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers will study before June the possibility of an exit strategy from the global oil supply cut agreement.

“There are still meetings every couple of months for the ministerial monitoring committee, and there will be a study formed for the possibility of an exit strategy... before June,” he told reporters.

Led by Russia, the OPEC and nonOPEC producers have agreed to extend oil output cuts until the end of 2018 as they try to clear a global oil glut.

OPEC next meets in June, while the meeting for the ministerial monitoring committee, known as the JMMC, is due to be held in January in Oman.

Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market does not flip into a deficit too soon, prices do not rally too fast and rival US shale firms do not boost output further.

Moscow needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude.

Russian Energy Minister Alexander Novak said on Wednesday the process of exiting the deal may take between three and six months, depending on how much the global oil market has recovered by then and on the scale of oil demand.

Under the current deal, the producers are cutting supply by about 1.8 million barrels per day.