MOSCOW (Reuters) - A global deal to cut oil output led by OPEC and Russia should continue because the market is still not balanced, Russian Energy Minister Alexander Novak said on Tuesday.
The output cuts that began a year ago in a bid to remove a global oil glut have pushed up the price of benchmark Brent crude by more than 50 percent since mid-2017 to hit $70 a barrel last week for the first time since December 2014.
One of Russia’s leading oil producers Lukoil said Russia should start exiting the pact if crude prices remained at $70 per barrel for more than six months.
“Right now, I think the agreement must continue and not react to momentary, passing changes,” Novak said, speaking to reporters at the sidelines of the annual Gaidar forum.
“I believe we need to be consistent and stable in our decisions and make our judgments carefully, based on long-term thinking,” he said.
Novak had said on Friday the possibility of gradually winding down the deal, which runs to the end of 2018, would be discussed at a Jan. 21 meeting in Oman.
While enjoying the extra revenues, the Organization of the Petroleum Exporting Countries, Russia and their allies remain wary of sending prices so high that U.S. shale production climbs even faster and the market becomes oversupplied again.
Novak told reporters on Tuesday said he did not see the oil price as a leading indicator and that the balance between supply and demand in the market was more important.
He said it was not clear whether current prices were long-term and said they could be affected by colder weather, which tends to drive them higher. He said he continued to stick to a forecast of $50 to $60 per barrel for 2018.
Reporting by Darya Korsunskaya and Katya Golubkova; Writing by Polina Ivanova; Editing by Louise Heavens and Edmund Blair