OPEC meeting Russia in the hope of extending oil production cuts to prop up prices
The energy ministers of OPEC members Saudi Arabia and Venezuela plan to meet their Russian counterpart to discuss extending oil-output cuts amid a developing consensus that they should prolong their joint effort to curb supply.
Saudi Minister of Energy and Industry Khalid Al-Falih said that he will talk with Russia’s Alexander Novak by phone this week and meet him within the next two weeks. Venezuela’s Oil Minister Nelson Martinez was also planning to visit Moscow after talks in Algeria on Wednesday, said a person familiar with the matter.
Saudi Arabia and a number of other Middle Eastern crude producers reached an initial agreement last week to continue output cuts beyond their June expiry, while Venezuela and Algeria backed an extension on Wednesday. Those decisions came after almost four months of limits on production led by the Organisation of Petroleum Exporting Countries and Russia failed to achieve their target of reducing oil inventories below the five-year historical average.
“There seems to be a consensus in that direction, but we’re not 100 per cent there,” Al-Falih told reporters in Baku on Wednesday, when asked about a potential extension. “We still need to talk to all countries. A very important country to talk to, of course, is Russia, the biggest non-OPEC exporter.”
The 24 nations that agreed last year to cut production will decide at a meeting in Vienna on May 25 whether to extend the deal, Novak said last week. The Russian minister also plans to hold talks with Russian oil companies, who may find another six months of supply curbs more challenging to implement than the initial deal. The Energy Ministry’s press service wasn’t immediately able to comment on Wednesday.
Saudi Arabia and Russia will try to “develop a decision that everybody has to support,“ Al-Falih said. If the oil market doesn’t balance by June, ”all of us will be pragmatic enough to do the right thing,“ he said.
Algerian Energy Minister Noureddine Boutarfa held talks with his Venezuelan counterpart on Wednesday and both men agreed to back extension of supply cuts, according to the Algerian ministry’s Facebook page. They supported an additional six months of curbs, said the person familiar with the matter, who asked not to be identified because the meeting was private.
Martinez said he was visiting several countries, including Algeria and Russia, carrying a message from Venezuelan President Nicolas Maduro proposing to hold a summit of heads of state from OPEC nations and other non-members, the state-run Algerian Press Service reported.
Azerbaijan, another participant in last year’s deal, also supports prolonging the supply curbs, Al-Falih said after meeting with the nation’s Energy Minister Natiq Aliyev. “We’re totally aligned. We think we need to bring global inventories to where the five-year average should be.”