SOCHI, Russia (Reuters) - It is too soon to say if a global deal on oil output cuts will be extended later this year, but the current agreement envisages such a possibility, Russian Energy Minister Alexander Novak told Reuters in an interview.
The Organization of the Petroleum Exporting Countries and non-OPEC producers, led by Russia, in December reached their first deal since 2001 to jointly curtail oil output, by around 1.8 million barrels per day (bpd).
The deal is effective until the end of June. OPEC sources told Reuters last month that the group could extend the pact with non-members or even apply deeper cuts from July if global crude inventories fail to drop to a targeted level.
OPEC’s next meeting is planned for May 25.
“It is premature to talk of what we will discuss in April-May. The technical possibility of the deal extension is envisaged by the agreements,” Novak said in an interview cleared for publication on Thursday.
Officials in the 13-member OPEC, including Saudi Energy Minister Khalid al-Falih, have said global oil stocks need to fall near to their five-year average for the group to say markets are becoming balanced.
Novak said further action would depend on the size of stocks and how output in other producers, notably in the United States, China and Norway, which did not join the pact, would affect the global balance of supply and demand.
End-December stocks of crude, natural gas liquids and oil products in OPEC member countries had fallen below 3 billion barrels, but were still 286 million barrels above the five-year average, the International Energy Agency said last month. Stocks also continued to build in China and volumes of oil stored at sea increased.
Novak said Moscow was unlikely to cut more than it had already pledged if other non-OPEC producers failed to comply with their own promises.
“Each country is responsible for its production. In particular, oil companies in Russia voluntarily defined their output plans for 2017 and we can only bear responsibility for our own figures,” he said.
Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan are the other non-OPEC producers party to the deal.
Novak said oil production in the United States may rise by between 400,000 bpd and 500,000 bpd this year. That is slightly above a previous forecast of a 300,000 to 400,000 bpd increase.
Russia itself has pledged to cut output by 300,000 bpd in the first half of the year via a gradual strategy that would see output cut by 200,000 bpd in the first quarter.
So far, Russia’s cuts have amounted to around 100,000 bpd.
If the output cut deal is not extended, overall Russian oil output for 2017 might rise to 548 million to 551 million tonnes (11.01-11.07 million bpd) from 547.5 million tonnes last year, said Novak.
He forecast an average Brent oil price for 2017 of $55-60 per barrel and said the price of Russia’s flagship Urals blend would likely be $2-$3 per barrel below that.
Writing by Vladimir Soldatkin; Editing by Katya Golubkova/Andrew Osborn/Susan Thomas