OPEC Oil Deal Extension Likely, Says Russia, Which Also Reports Increased Production Throughout 2017

Tuesday September 5, 2017

The final dog days of summer wouldn't be complete without more speculation about the future of the Organization of the Petroleum Exporting Countries (OPEC) oil output reduction initiative, and on Monday that speculation was provided by ally Russia, which painted the initiative in glowing terms and yet suggested its duration beyond next March is likely.

Arkady Dvorkovich, deputy prime minister for the former Soviet Union, told Bloomberg that while OPEC's reductions were  "efficient and contributed to the stabilization of the market," the most likely next step "would be to extend the deal - but it is premature to say that this will be the final decision."

He added that oil prices in the $50-$60 range should be expected "in the medium term."

In a separate interview, Dvorkovich explained his rationale for prices by saying "$100 is not good - it creates a huge stress on the global economy," whereas oil at $60 "will create a predictable market environment and will hopefully stabilize markets."

Throughout his interviews the deputy prime minister expressed an unabashed `Russia first' sentiment, and this is appropriate in light of reports that the country increased its oil and gas production between January and August of 2017 by 0.9 percent year over year, amounting to 364.8 million tons.

Oil exports to overseas countries increased by 3.6 percent to 173.432 million tonnes in the first eight months, while the August's exports reached 21.459 million tonnes.

Russia's gas production during the eight-month period increased by 12.6 percent  to 448.242 billion cubic meters; in August, this production amounted to 54,196 billion cubic meters.

However, the country's energy ministry reports that last month it cut production by 344,000 barrels per day (bpd) compared to its quota of 300,000 bpd as agreed to under the OPEC cutback deal.

Last week, Jabar al-Luaibi, oil minister for cutback cheater Iraq, weighed in with his support of OPEC, stating that a decision on whether to extend the agreement would be made in November and that if an extension was agreed upon, his country would comply with it.