By May 12, 2016 Read More →

Global oil surplus won’t balance before H1 2017: Russian energy minister

Global oil surplus at 1.5 million bpd

Global oil surplus

Russian Energy Minister Alexander Novak says his prediction that the global oil surplus will balance in the first half of 2017 is optimistic.  Apache photo.

By Darya Korsunskaya and Olesya Astakhova

MOGILEV/MOSCOW, May 12 (Reuters) – Russian Energy Minister Alexander Novak told reporters on Thursday that the global oil surplus stood at 1.5 million barrels per day (bpd) and that the market might not balance out until the first half of 2017.

A deal to freeze oil output by OPEC and non-OPEC producers fell apart last month after Saudi Arabia demanded that Iran join in, ruining any chance of sealing what would have been the first such cooperation plan in 15 years.

“This (the forecast that the market won’t balance until the first half of 2017) is an optimistic forecast as oversupply persists and the decline in production volumes is slower than analysts expected,” he said.

Novak had previously said the Doha deal would have sped up the process of rebalancing the oil market by three to six months, with oil prices rising to $50 per barrel towards the end of this year.

On Thursday, he said no new talks on an oil output freeze were being held with other producers, but that Russia was ready to return to the subject if other countries proposed it.

“We don’t have any talks on this subject at the moment. The situation with oil prices is more or less normal, stable, and is satisfying many countries,” Novak said.

He was also quoted by the RIA news agency as saying separately that Russia and Qatar planned to discuss the situation on global oil markets at an intergovernmental commission meeting in Moscow on June 3, the day after a regular OPEC gathering in Vienna.


Russian oil output fell slightly to 10.84 million barrels per day (bpd) in April, down from its highest level in nearly 30 years in March of 10.91 million bpd. Sources close to the energy ministry attributed the decline to seasonal maintenance at oilfields and refineries.

Novak said he expected Russia to produce 540 million tonnes (10.81 million bpd) or more of oilthis year, up from 534 million tonnes in 2015.

According to Vygon Consulting, an independent analytical firm, Russian oil and gas condensate production may reach 544.6 million tonnes this year, rising to 565 million tonnes in 2017.

Grigory Vygon, managing director at the firm, told a briefing on Thursday that the rise was expected on the back of recently launched greenfields such as Gazprom Neft’s Arctic offshore Prirazlomnoye field, Bashneft’s Trebs and Titov among others.

Russian oil production was rising despite a fall in oil prices because the weak rouble was compensating for low prices, he said. If the rouble strengthened and taxes rose, he said his forecast would need to be changed.

(Writing by Vladimir Soldatkin and Katya Golubkova; Editing by Andrew Osborn)

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