As economies begin to emerge from coronavirus bottlenecks, demand for oil begins to recover, so there is no point in extending deep cuts further, said Dmitriev, adding that the one-month extension beyond from the initial expiration at the end of June of the deep cuts were a “very wise decision”.
Asked about Saudi Arabia’s price war on the oil market following Russia’s initial refusal to extend the previously agreed cuts, Dmitriev said, “Each country acts in its own national interest. But the advantage of OPEC + is that the group can act together to serve the interests of Saudi Arabia and Russia, as well as other oil producers and consumers. ”
OPEC + agreed earlier this month to extend the oil production reductions of 9.7 million bpd it approved in April for another month, as national closures linked to the global pandemic have wiped out a substantial part of world oil demand and pushed prices further. Russia, however, was reluctant about the expansion, at least publicly.
Russia agreed to implement some of the largest reductions in the extended oil cartel in April, reducing production from a benchmark of 11 million b / d to 8.5 million b / d from May . The oil companies were not particularly pleased with this, just as they were not satisfied with the previous cuts, Rosneft chief executive Igor Sechin expressing his dissatisfaction.
The economy has also suffered from cuts, according to ING data released earlier this week. It showed a 9.6% drop in industrial activity in May, the first month of actual cuts, of which 5 percentage points came from cuts in oil production.
By Irina Slav for Oilprice.com
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