Russia sees global oil market balancing in June-July

MOSCOW (Reuters) – Russia’s energy ministry sees global oil demand and supply balancing in the next two months, it said on its Twitter feed on Monday, citing the minister Alexander Novak.

Leading oil producers are due to hold an online conference in around two weeks on how to further police joint efforts to steady a global oil market hammered by overproduction and a demand drop linked to the coronavirus pandemic.

“For now, the surplus stands at around 7-12 million barrels per day. The energy ministry is counting on the market to balance out in June – July thanks to a consumption increase,” the ministry quoted Novak as saying at a state council meeting on energy.

The minister also said supply has already dropped by 14 million to 15 million barrels per day thanks to the OPEC+ deal and output cuts in other countries.

OPEC+ – a group made up of the Organization of the Petroleum Exporting Countries and other leading oil producers including Russia – agreed last month to cut their combined output by almost 10 million bpd, or roughly 10% of global production.

They also expected other large oil producers, such as the United States, Canada and Norway, to make additional cuts.

The RIA news agency, citing an unnamed source familiar with the minister’s speech at the state council meeting, reported that the energy ministry considers non-OPEC+ countries to have already cut output by 3.5 million to 4 million bpd.

RIA also said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.

The energy ministry declined to comment on output volumes.

Sources have told Reuters that OPEC and its allies want to maintain existing oil supply cuts beyond June, when the OPEC+ group is due to meet next.