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After suggesting the Kremlin may withdraw early from the production agreement with OPEC, Russia’s energy minister says not so fast.
“The world’s two biggest oil producing and exporting countries can continue their cooperation for the good of the crude industry, for the good of stability,” said Energy Minister Alexander Novak in an interview with Bloomberg.
Although much of the supply overhang has been worked off, it seems the cartel and associated countries are concerned about American oil shale producers ramping up production in the face of higher prices.
“Generally speaking, this year it should get balanced, when – time will show,” he said. “As of now, cutting the stock is good, across the world,” added Novak.
According to the Russian minister, still remain high risks shale oil’s producers may build up production while the prices are that high. “There is a combination of factors, including the expenses in the sector…We can see the rates there are rather volatile,” reported Russian state media agency TASS.
Saudi Arabia joined in the discussion, also leaving open the possibility the OPEC agreement with Russia could be extended.
“As we approach the re-balancing by the end of 2018, we need to extend the framework but not necessarily in the production levels,” Saudi Energy Minister Khalid Al-Falih said. Excess oil inventories have declined by 220 million barrels from a level of 340 million barrels in early 2017, he said. “We’re uncertain that the pace of inventory drawdown will continue in coming months.”
“We don’t feel that OPEC alone can do it,” Al-Falih said in the interview. “That’s why we waited until we had enough non-OPEC countries including Russia to come together in late 2016,” reported Bloomberg.