MINERALNYE VODY, Russia – Russia said on Friday it needed more time to decide whether to join any additional oil output cut by OPEC, saying U.S. crude production growth would slow and global demand remained solid.
Source: Reuters
Energy Minister Alexander Novak was speaking as the Organization of the Petroleum Exporting Countries has been pushing Moscow to decide whether to deepen cuts in response to a coronavirus outbreak that has hit the global economy.
A technical panel that advises OPEC and its allies led by Russia, a grouping known as OPEC+, proposed on Thursday a provisional cut of 600,000 bpd, three sources told Reuters.
Novak said Moscow needed more time to assess the situation, but indicated that he was not very concerned about demand and saw supply growth slowing, suggesting OPEC and its allies should not rush to reduce production further.
“I can’t tell you about my position right now, maybe we will say it next week,” Novak said when asked about Moscow’s position. “Russia needs a few days for market analysis.”
He said global oil demand might fall by 150,000 to 200,000 barrels per day (bpd) this year due to the virus outbreak and other negative factors, a lower figure than other forecasts.
Novak said his estimate was “an insignificant volume, taking into account that the volatility in consumption also depend on many factors, such as Libya, Iran, Venezuela, where supply is also quite volatile.”
Others have suggested a much bigger impact. BP said a global slowdown was expected to reduce 2020 oil demand growth by 300,000-500,000 bpd, or up to 0.5% of total demand.
Novak also said U.S. oil output was not expanding as fast as before.
“Growth is slowing down in the United States. It was 1.3 million bpd last year … This year, we expect less than 1 million,” he said. “Oil production growth is slowing down there due to lower prices.”
Producers in the OPEC+ grouping are scheduled to meet in Vienna on March 5-6, although that date could be brought forward depending on how the virus outbreak affects crude prices.
