Russia sees oil market balance in June-July on OPEC+ cuts

Russia, OPEC’s key ally in the deal to cut oil production and ease a global glut, sees the market balancing in June or July.

Around the world, producers have lowered global oil supply by 14-15 million barrels a day so far, Energy Minister Alexander Novak said in a statement Monday.

Non-OPEC+ countries, including Canada, Norway and the US, have contributed with cuts of around 3.5-4 million barrels per day, RIA Novosti reported earlier, citing an unidentified person with knowledge of the minister’s speech.

The Organization of Petroleum Exporting Countries and partners reached a historic deal in April to reduce combined production by 9.7 million barrels per day. The agreement came about a month after Russia balked at demands for deeper cuts and Saudi Arabia launched an oil-price war as the coronavirus outbreak slowed global consumption.

Despite the initial market skepticism, oil prices have leaped nearly 65 per cent in the past four weeks as the OPEC+ cuts have taken hold and economies including China start to reopen.

Russia has reached the output level pledged in the OPEC+ deal, cutting 2 million barrels a day, RIA reported, citing Novak’s speech. While the nation agreed to reduce its crude-only production in May and June by 2.5 million barrels a day, it also includes condensate — a hydrocarbon similar in quality to light crude — in its total production figures. Russia can produce about 700,000 barrels a day of condensate.

While Saudi Arabia, Kuwait and the UAE pledged additional voluntary cuts earlier this month, Russia so far has not signaled it would follow suit. The nation aims to strictly follow the conditions of the OPEC+ deal, Novak told Bloomberg last week.