Russia’s Top Oil Producers Support Further OPEC+ Cuts

Russia’s key oil producers voiced support for the idea of extending OPEC+ output cuts into the second quarter, as the global oil market awaits a definitive response to the coronavirus outbreak.

Executives who attended a meeting with Russian Energy Minister Alexander Novak on Wednesday said there was no final decision and gave no indication of whether deeper cuts were proposed or discussed.

“Most of the companies are inclined to extend for one more quarter” the current deal between the Organization of Petroleum Exporting Countries and its allies, Ravil Maganov, first vice president for Lukoil PJSC, told reporters after the meeting in Moscow.

Gazprom Neft PJSC, the oil arm of gas giant Gazprom PJSC, thinks it makes sense to extend the current cuts into the second quarter “and then to monitor the situation and act in line” with it, Chief Executive Officer Alexander Dyukov said.

Evgeny Tolochek, president of independent oil producer Russneft PJSC, also voiced support for proposal to keep the current cuts, adding that its “time frame is a matter of negotiations.”

OPEC+ is still waiting for Russia to clarify its position on deeper oil output cuts, aimed at mitigating the effects of the coronavirus outbreak in Asia. Novak last week promised to give an answer in days, yet so far the ministry remains silent.

Technical experts from the producer group and its allies recommended a temporary deepening of the cut by 600,000 barrels a day in the second quarter. They also recommended maintaining the current 2.1 million barrel-a-day cut through the second half of the year.

The epidemic has curbed energy demand from China, the world’s largest crude consumer. In its latest monthly market report, OPEC slashed forecasts for global oil demand leaving the group facing a renewed glut despite its recent production cuts.


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