Russian Federation cut June oil output by more than required in global pact


Russian Energy Minister Alexander Novak said on Monday that all OPEC and non-OPEC countries favored extending their global oil output deal by nine months under the same terms agreed in December.

The oil producers' cartel, OPEC, is considering a six- to nine-month extension of its current deal to cut production, facing a weaker demand outlook due to slowing global growth.

Russia has agreed with Saudi Arabia to extend by six to nine months a deal with OPEC on reducing oil output, said Russian President Vladimir Putin, as oil prices come under renewed pressure from rising US supplies and a slowing global economy.

OPEC ministers are scheduled to meet on July 1 in Vienna to discuss their production policy for the next few months.

"The reason for extending the deal by nine months instead of six is to assure the markets that the deal will remain in place through the seasonally soft demand period in the first quarter of 2020", said Amrita Sen, co-founder of Energy Aspects.

Industry sources had earlier told Reuters that oil production was 11.15 million bpd in May, a figure reached by converting output in tonnes to barrels per day.

"We will extend this deal, Russian Federation and Saudi Arabia". What's more, Saudi Arabia unilaterally lowered production below its official OPEC+ target, pumping 9.7 million barrels a day in May, compared with a ceiling of 10.3 million.

OPEC may be losing its share of the global oil market, but not all losses are spread equally.

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"I disagree with people on the thesis that the geopolitical risk and the razor-thin supply doesn't matter because the economy is slow, because it just hasn't slowed down that much", Jaffe said.

At the previous meeting of the OPEC Conference, attempts by Saudi Arabia and its main ally, the USA, failed to reduce Iran's share of oil production in the long run.

The United States is not a member of OPEC, but it has demanded Saudi Arabia pump more oil to compensate for lower exports from Iran after slapping fresh sanctions on Tehran.

Benchmark Brent crude for September delivery jumped as much as 2.6 percent to $66.45 a barrel, while US crude futures for August delivery were up 2.65 percent at $60.01 a barrel.

He added, "If OPEC wants to be alive, we should take decisions inside OPEC and not receive decisions from outside OPEC".

But a Reuters poll of market analysts said prices could ease as the global economy slows and additional USA oil floods the market. He said in February that "legal and technical points" of a long-term charter were being finalized.

Analysts believe that the extension of the cuts for nine months is going to be cheered on by the market.

Jason Bordoff, a Columbia University professor and former energy adviser to President Barack Obama, wasn't surprised by Iran's reaction: "When the president of Russian Federation announces an OPEC decision before an OPEC meeting even starts, that may rub OPEC members the wrong way", he said.

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