Russian oil minister Alexander Novak said on Thursday that the production cut deal between the OPEC, Russia, and other oil producers dampened price volatility and helped decrease stockpiles, and therefore there is no need for additional measures.
In an interview with international news agency Reuters, the official stated there is potential for an oil rise from current crude prices and that $50 to $60 is “fair,” after Brent dropped by 20 percent during the first semester of the year. Currently, the European benchmark stands at around $48.
According to ElEconomista.com, the OPEC and other major oil producers like Russia agreed to reduce their output by 1.8 million bpd as of January 2017. The deal was later extended until March 2018. Despite the decision, crude prices saw their sharpest first-half decline in nearly two decades during the first quarter of the year, since the OPEC’s production cut was overshadowed by a rising production in the U.S. and other countries that did not join the pact.
Some analysts suggest that OPEC members, Russia, and their allies could have to implement new measures, such as deepening the cuts or further extending them beyond March.
Despite the fact that oil prices are currently nearing November levels, prior to the OPEC announcement, they are still far from the $27 lows reached in early 2016.
Novak said there is potential for prices to rise from current levels and sustained that inventories are expected to fall to five-year averages in industrialized nations thanks to the OPEC’s decision.