Russia calls for more oil output cut discipline

Minister Alexander Novak said that “some countries are not yet fully implementing” the cuts, after a meeting of OPEC and non-OPEC countries in the Russian city of St. Petersburg on Monday.

“Despite the high level of compliance with the agreement, we insist on all countries fulfilling their obligations 100 percent,” he said, in comments reported by Russian state news agencies.

Novak said he would be open to tighter monitoring of output and a possible extension of the cuts beyond their scheduled end in March 2018.

OPEC agreed with several non-OPEC producers led by Russia to cut oil output by a combined 1.8 million barrels per day (bpd) from January 2017 until the end of March 2018.

Beyond high US output, oil prices have also been pressured by production increases in OPEC members Libya and Nigeria, which have exemptions from the cuts due to political instability.

The International Energy Agency has estimated that compliance with the OPEC output cut fell to 78 percent in June, from 95 percent the previous month.

Prices fell below below $50 (44 euros) per barrel recently due to higher production in the US, which was not part of the deal – and also some countries’ lack of discipline in enforcing cuts, for example Nigeria.

Moscow and Riyad share concerns

Russia and Saudi Arabia face mounting domestic pressures to bollster oil prices.

Russia, which is heavily reliant on oil revenues, holds a presidential election next year, while Saudi Arabia needs higher prices to balance its budget and support next year’s planned listing of state oil firm Saudi Aramco.

Saudi Energy Minister Khalid al-Falih said the kingdom’s exports would fall to 6.6 million bpd in August as demand at home was rising, effectively representing a cut of 1 million bpd year-on-year.

He said global stocks had fallen by 90 million barrels, but were still about 250 million barrels above the five-year average for industrialized nations, which is the level OPEC and non-OPEC states are targeting with their output curbs.

Nigeria agrees

Nigeria later on Monday voluntarily agreed to limit its oil output at 1.8 million barrels a day, when it reaches this level. Oil prices jumped on the news, with Brent up about 1 percent at $48.50, also pushed up by Khalid al-Faliha’s comments. 

jbh (AP)

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