EMEA News
Russia Achieves Full Crude Reduction Compliance But Experts Say OPEC Still Needs to Extend Its Cutback Initiative
After being accused of lagging in its commitment to reduce crude output as a non-member participant of the Organization of the Petroleum Exporting Countries (OPEC) production cut initiative, Russia has now hit 100 percent compliance - but it's still not enough to achieve the cartel's objective of getting the oil market closer to a true rebalance, say experts.
Alexander Novak, energy minister for Russia, told media on Friday that his country has reached its 300,000 barrels per day (bpd) cut target: "Yesterday it was about 298,000 barrels; we can say that we have reached 300,000 barrels."
Russia had undertaken the cut off its October daily average, which exceeded 11 million bpd.
Saudi Arabia's energy ministry called Russia's contribution"good" and said overall non-OPEC compliance was 85 percent.
However, despite the former Soviet Union's efforts and those of other OPEC members and non-members, an extension of the six month cutback initiative is perceived as being just as badly needed as ever, and Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, summarized the sentiments of many in the analytical community by tellng CNBC that the overall cutback numbers at present are simply lacking.
He said the Russian cuts are "probably not enough because in the end there are only a few months left in the deal."
Russian officials said they will decide whether to support an extension by May 24, one day before OPEC convenes to discuss the issue in Vienna, and many experts believe a consensus is imminent: Greg McKenna, chief market strategist at brokerage AxiTrader, remarked, "OPEC ... effectively said the production cut will be extended, meeting the reality of the restart of a big Libyan oilfield and the continued expansion of U.S. shale oil."
Even though Russia is making itself out to be the good guys, there's still the spectre of its publicly stated commitment - never rescinded - to boost production to record levels once the OPEC deal expires: this could see the country averaging 11.07 million bpd compared to the 10.96 million it was pumping in 2016.
