VIENNA (Reuters) – OPEC and Russia appear keen to prolong oil supply cuts until the end of 2018 this week, saying they can revise the deal when they meet in June if the market overheats.
prices soared above $ 60 per barrel, Russia has questioned the desirability of extending existing cuts of 1.8 million barrels per day until the end of next year, since such a measure could cause an increase in the American production.
Russia needs much lower oil prices to balance its budget than OPEC's leader, Saudi Arabia, which is preparing a stock quote for national energy champion Aramco next year and, therefore, would benefit from a more expensive crude.
Six OPEC ministers and non-OPEC oil producers, including Saudi Arabia and Russia, will meet in Vienna on Wednesday, one day before a full OPEC meeting, to review the recommendations of their delegates.
On Tuesday, a joint OPEC and OPEC committee recommended extending the cuts until the end of 2018 with the option of revising the agreement at the next OPEC meeting in June, said three sources from the Organization of the Exporting Countries of OPEC. Petroleum.
"The nine-month OPEC option is really a six-month option (or three months) as it will be re-evaluated at the next meeting," said Jamie Webster, director of the Center for the Energy Impact of Boston Consulting Group. Existing cuts expire in March.
Brent and US reference prices fell on Wednesday for the third day in a row, although Brent remained above $ 63. [O/R]
The Energy Minister of the United Arab Emirates, Suhail bin Mohammed al-Mazroui, said on Tuesday that cutting production throughout 2018 remains the main scenario, but not only.
"We have seen very good results for the market recovery, we still have to continue," he said.
Production cuts have been in effect since the beginning of 2017 and helped halve an excess of world oil stocks, although those remain at 140 million barrels above the five-year average, according to OPEC.
Russia has indicated that it wants to better understand how producers will come out of the cuts, as it needs to provide guidance to its private and state energy companies.
Some producers, including Rosneft, led by an ally of President Vladimir Putin, Igor Sechin, have questioned the logic of prolonging the cuts, saying that it will cause a loss of market share for US companies, which are not reducing production .
OPEC, which comprises 14 countries, has traditionally been less concerned with exit strategies, since its members have been known to reduce compliance and cheat their quotas for the expiration of such agreements.
"OPEC and Russia will realize that they are losing market share and that they will be better off if they return to a more competitive environment," Citi head of commodities research Ed Morse told Reuters.
Citi rival Goldman Sachs said in a note on Tuesday: "We continue to expect a gradual increase in OPEC and Russian production starting in April."
Additional reports by Rania El Gamal, Shadia Nasrallah, Alex Lawler and Vladimir Soldatkin; Written by Dmitry Zhdannikov; Edition by Dale Hudson