Novak says no decision yet on Opec+ cuts extension

Russian energy minister Alexander Novak said today that there are no plans at the moment for the Opec+ alliance to deviate from its intention to ease crude production cuts in August, arguing that the market would benefit from the group changing its decisions on output policy "as little as possible".

The Opec+ coalition agreed in April to remove a combined 9.7mn b/d from the market in May-June, largely from an October 2018 baseline, and to dial down the cuts to 7.7mn b/d for the rest of the year. But the group agreed last month to extend the deeper cuts until the end of July.

As of now, this plan remains in place, Novak said today at an online conference organised by Russian think-tank the Valdai Club. "There are no decisions at the moment that any changes are being prepared. We [Opec+] have an agreement in place, under which we have prolonged May-June restrictions only to July," he said. "As the current agreement implies, from 1 August we will have a partial recovery from those unprecedented cuts… In future, we will be following the recovery trend anyway, as long as demand is rising and the situation gets stable."

Russia and Saudi Arabia are the de facto leaders of the Opec+ group and are key members of the Joint Ministerial Monitoring Committee (JMMC), which monitors compliance with output quotas. The JMMC used to meet bi-monthly, but under the latest deal it meets once a month. The next meeting is on 15 July.

"[The] JMMC started to meet once a month and this gives us opportunity to be more flexible when evaluating the situation and taking decisions, although it would be more right for the market that the decisions which were already taken, at least for several months ahead, are changed as little as possible," Novak said. "In that case the market would perceive the situation as more stable. We have to see what technical data we will have [by 15 July]," he said.

The JMMC can issue recommendations to Opec+ countries, but in the past decisions on output policy have only been taken at full ministerial meetings.

By Anastasia Krasinskaya