Saudi Arabia, Russia: ‘Common’ oil view
st petersburg — Russia and Saudi Arabia have a common position on the future of the oil output cut deal, Russian Energy Minister Alexander Novak said on Thursday, while Russia’s Lukoil said the deal should remain in place but needs to be altered.
“We have a common position,” Novak said at an economic forum in St Petersburg, which Saudi Arabia’s Energy Minister Khalid Al Falih is also expected to attend.
The Saudi-led Organisation of the Petroleum Exporting Countries and other large oil producers, notably, Russia, have agreed to reduce output by 1.8 million barrels per day until the end of the year.
Some oil market participants have expressed concerns about potential oil shortages amid production decline in Venezuela and after US President Donald Trump’s announced plans to pull the United States out of the Iran nuclear deal.
Saudi Arabia has indicated that it could raise its oil output to offset any potential supply deficit.
Vagit Alekperov, head of Russia’s No.2 oil company Lukoil, which produces over 1.7 million barrels per day, said it was time to raise oil production as prices have hit $80 per barrel, a level not seen since late-2014. Opec and non-Opec countries will meet in June in Vienna to discuss their cooperation and the future of the deal.
“I hope that minister Novak will gather us before the meeting... the oil price at $80 is already high,” Alekperov said. Novak said he believed oil prices average more than $60 per barrel in 2018, the RIA news agency reported. Oil fell on Thursday, driven lower by the prospect of the first increase in Opec output since 2016 in the face of concern over supply from both Venezuela and Iran, while a surprise rise in US crude inventories raised doubt over seasonal demand.
Benchmark Brent futures were down 59¢ at $79.21 a barrel by 0922GMT, while US crude futures eased 41¢ to $71.43 a barrel.
“This discussion about possible Opec supply increases after the June meeting has put a brake on the oil price for the time being, so $80 is a big hurdle to overcome,” Commerzbank strategist Carsten Fritsch said. “If prices get above there, that will further intensify and increase the likelihood that the Opec will do something. It’s going to be very difficult to overcome this level on a sustainable basis before the Opec meeting.”
Meanwhile, commercial US crude inventories rose by 5.8 million barrels in the week to May 18, beating analyst expectations for a drop of 1.6 million barrels, the Energy Information Administration said. —