Novak: OPEC+ to sell extra oil internally after raising output

MOSCOW, Jul 15 (PRIME) -- Softening of oil production cuts by the OPEC+ alliance in August is reasonable, because extra volumes that will be produced at the second stage of the deal will be consumed by internal markets of the participants, Russian Energy Minister Alexander Novak said on Wednesday.

“Insignificant softening of the current production cuts, and the launch of a second stage of reduction in the amount of 7.7 million barrels per day is fully in line with the urgent market trends and will allow avoiding volatility as almost the entire extra production volume will be consumed by the producers’ internal markets thanks to recovering demand,” he said.

Saudi Arabia’s Energy Minister Abdulaziz bin Salman Al-Saud also said that the OPEC+ committee will consider softening of the production cuts.

He added that his state does not plan to change the volume of oil exports in August.

Al-Saud said that the OPEC+ alliance fulfilled the deal by 107% in June, or by a record high of 95% excluding voluntary additional cuts by Saudi Arabia, the UAE, and Kuwait.

Novak said that the OPEC+ has to continue monthly monitoring of the global oil market due to the threat of a second wave of the coronavirus pandemic, and added that reduction of oil production cuts will not alter obligations of the members, who had failed to comply with the deal fully in May or June.

In April, the OPEC+ countries agreed to reduce their oil output by 9.7 million barrels per day in May, with Russia’s share of 2.5 million barrels per day, and to decrease daily reduction afterwards. In June, the participants decided to prolong the cut of 9.7 million barrels per day for July. The agreement is valid until April 30, 2022, but the members will revise its extension in December 2021.

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