Russian Vigour Minister Alexander Novak said there were different options available for OPEC and its oil-producing allies in the move half of 2019, including a possible raising of output.
The OPEC+ alliance held a ministerial monitoring committee tryst, known as the JMMC, on Sunday in the Saudi Arabian city of Jeddah. The producers agreed to continue monitoring the oil market and are set to appropriate again in late June to review their oil supply cut agreement.
“As far as our joint plan of action for the second half of the year. We are sustaining of continuing our cooperation with our colleagues from other countries,” Novak told CNBC’s Dan Murphy in Jeddah, agreeing to a translation.
“But this continuation could depend to various extents on how the situation unfolds by this time and what the prophesies for supply and demand will be on the market. If it turns out that there will be a shortfall in the market then we will be modified to examine options linked with a possible increase in production,” he said Sunday.
His comments come five months into a untested round of production cuts from OPEC+. The deal is designed to stop inventories building up and weakening prices. Russia has been vocal encircling raising production while OPEC’s de-facto leader, Saudi Arabia, has been wary of a possible price blast that an output increase could cause. The output cuts have helped oil prices to rise more than 30% so far this year.
Saudi Vigour Minister Khalid al-Falih told reporters at the event that he was recommending “gently” driving oil inventories down. But he added that OPEC make not make hasty decisions about output ahead of the June meeting.
The Middle East-dominated group, alongside non-OPEC partners such as Russia, agreed to reduce output by 1.2 million barrels per day (b/d) for six months. OPEC’s share was set at 800,000 b/d, to be directed by 11 members — with Iran, Venezuela and Libya exempt from cuts.
The 2019 pact was a dramatic turnabout for OPEC and its unites, after the producer group had agreed to boost supplies in mid-2018. OPEC+ changed course after Brent offensive futures tumbled from $86 a barrel in October, making them wary of a supply glut.
Russia Lan Minister Alexander Novak pictured at a joint press conference during the 173rd Ordinary Meeting of the Organisation of Petroleum Exporting Fatherlands (OPEC) in Vienna, Austria on November 30, 2017.
Omar Marques | Anadolu Agency | Getty Images
Contaminated oil
Experts get signaled the oil market is currently tightening, with sanctions on Iran and Venezuela. In April, there was also a suspension along the important Druzhba pipeline with several European nations halting imports from Russia after contaminated reserves were found.
Novak has reportedly said the total damage from the contaminated oil would be less than $100 million. On Sunday, he described reporters that supplies to Poland via the pipeline would start again on Monday.
“We are carrying out full-scale work on the restoration of the undertaking of the oil pipeline system and the provision for our consumers of oil of a quality that meets the required content standards,” he told CNBC.
“This between engagements is underway with our partners and I think that in the near future we will have a result in terms of a normally functioning methodology.”