OPEC Chief: Russia Pledged Not to Flood Market with Oil

Russian President Vladimir Putin has pledged not to abandon a deal with OPEC to keep a lid on oil supplies, even as crude prices rise, OPEC Secretary General Mohammed Barkindo said on Monday.

Oil prices have rebounded nearly 60 percent since June, with Brent crude rising to three-year highs above $71 a barrel, prior to a pullback last week that wiped out its gains for 2018. A stronger-than-anticipated rally has raised concerns that Russian oil giants will seek an exit from OPEC’s agreement with Moscow and other producers to limit their output.

The worries have been compounded by rising U.S. crude exports that threaten to loosen Russia and Saudi Arabia’s grip on key overseas markets at a time of strong economic growth and rising demand for petroleum products.

However, Barkindo says President Vladimir Putin and Russian Energy Minister Alexander Novak have assured him Russia won’t blink.

“I have heard and received assurances both from Mr. Alexander Novak [Russia’s energy minister] and President Putin that they will remain committed to the OPEC, non-OPEC collaboration and the Declaration of Cooperation,” he told CNBC on the sidelines of the Egypt Petroleum Show in Cairo.

“They have proved this beyond any reasonable doubt through their high level of conformity to their supply adjustment, so I think there’s no concern here,” he said. “We are all in the same boat.”

Market-watchers have long been wary of Russia’s commitment to the deal. The nation’s oil and gas giants are seen as reluctant participants in the agreement, which began in January 2017 and aims to keep 1.8 million barrels a day off the market through the end of the year.

Russia vowed in 2016 to cut its output by 300,000 barrels, but unlike the state-owned oil companies typical of OPEC, Russian energy giants are publicly-traded enterprises with shareholders.

On Monday, Russian Energy Minister Alexander Novak said it could take two to five months to exit the global oil output cut deal with OPEC and non-OPEC countries if and when such a decision was taken.

The duration of that deal is expected to be reviewed at OPEC’s next meeting in June when member countries will consider the current oil price and forecast prices when considering what action, if any, to take.

“It could take three, four, five months or maybe just two (to exit the deal),” Novak said in an interview with Interfax news agency.