PRESS: OPEC+ deal to be cancelled gradually, consensus found

MOSCOW, Dec 22 (PRIME) – OPEC and non-OPEC states have agreed to cancel their output cut agreement gradually and in line with rising global demand, Energy Minister Alexander Novak said in an interview with Kommersant business daily released on Friday.

“As to the exit from the deal, there is consensus that it needs to be gradual and follow growth in demand to avoid oversupply. At the same time, we keep watching the main market trends including shale oil production,” he said.

Novak added that the deal implies a rise in U.S. crude production by 0.3-0.35 million barrels of oil daily or by 0.7-0.75 million barrels by December.

“Our forecast has proved precise enough, the demand and supply dynamics is generally in line with our expectations. Mutual effort has given the market a firm ground for rebalancing. Demand has increased almost by 3 million barrels over the past two years, it will add 1.4-1.5 million barrels daily more in 2018,” he said.

The minister also said in an interview with Rossiya 24 television channel that global crude stock oversupply fell to 140 million barrels as of the end of 2017 from 340 million barrels at the beginning of the year thanks to the deal.

On Thursday, Reuters reported that OPEC started working with non-member producers on plans for an exit strategy from its deal to cut supplies.

In November 2016, OPEC and non-OPEC states agreed to reduce their oil production to rebalance the market. Russia joined the agreement in December 2016 with a promise to cut output by 300,000 barrels daily compared with the level of October 2016. The agreement was initially concluded for January–June, prolonged for nine more months in May and then until the end of 2018 in November.

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