Russia energy minister Novak sees options for OPEC deal

Russian Energy Minister Alexander Novak said there were different options available for OPEC and its oil-producing allies in the second half of 2019, including a possible raising of output.

“As far as our joint plan of action for the second half of the year. We are supportive of continuing our cooperation with our colleagues from other countries and OPEC non-OPEC countries,” Novak told CNBC’s Dan Murphy in Jeddah, Saudi Arabia, according to a translation.

“But this continuation could depend to various extents on how the situation unfolds by this time and what the forecasts for supply and demand will be on the market. If it turns out that there will be shortfall in the market then we will be prepared to examine options linked with a possible increase in production.”

His comments come five months into a fresh round of production cuts from the so-called OPEC+ alliance. The deal designed to stop inventories building up and weakening prices. The producers are set to met in late June to review their oil supply cut agreement.

Russia has been vocal about raising production while OPEC’s de-facto leader, Saudi Arabia, has been wary of a possible price crash that an output increase could cause. The output cuts have so far this year helped oil prices to rise more than 30%.

OPEC and its allies held their ministerial monitoring committee meeting, known as the JMMC, on Sunday in the Saudi Arabian city of Jeddah. Saudi Energy Minister Khalid al-Falih told reporters at the event that he was recommending “gently” driving oil inventories down. But he added that OPEC would not make hasty decisions about output ahead of a June meeting.

The Middle East-dominated group, alongside non-OPEC allies such as Russia, agreed to reduce output by 1.2 million barrels per day (b/d) for six months. OPEC’s share was set at 800,000 b/d, to be delivered by 11 members — with Iran, Venezuela and Libya exempt from cuts.

The 2019 pact was a dramatic turnabout for OPEC and its allies, after the producer group had agreed to boost supplies in mid-2018. OPEC+ changed course after Brent crude futures tumbled from $86 a barrel in October, making them wary of a supply glut.