The head of Russia’s sovereign wealth fund Kirill Dmitriev sees no point in extending strict global oil output cuts as world economies and oil demand recovers from the depths of the coronavirus crisis, he told the RBC Daily newspaper.
The comments from Dmitriev, who is one of Moscow’s top negotiators in oil talks, indicate that Russia wants curbs to be eased from August as envisaged by the existing plan.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, are cutting output by a record 9.7 million barrels per day (bpd), some 10% of global supply, after demand plunged by up to a third during the crisis.
A panel of the OPEC+ producers left the door open on Thursday to extending or easing those cuts from August, while pressing a number of countries, such as Iraq and Kazakhstan, to improve their compliance.
“We already see that economies have started to emerge from the coronavirus and markets are recovering, supporting oil demand, so there is no point to extend strict curbs for longer than a month (after July),” Dmitriev told RBC Daily.
The existing plans calls for the cuts to fall to 7.7 million bpd from August and stay at that level until December. It then envisages further cuts, easing to 5.8 million bpd from January 2021 through April 2022 when the pact is due to expire.
Oil prices have recovered to $42 per barrel from a 21-year low of below $16 in April. This is back at the level where Russia is balancing its budget and energy minister Alexander Novak said this week Moscow is happy with the current price.