Exit strategy of global cuts to be discussed before June

KUWAIT / Reuters

Kuwait’s oil minister Essam al-Marzouq said on Sunday that OPEC and other oil producers will study before June the possibility of an exit strategy from the global oil supply-cut agreement. “There are still meetings every couple of months for the ministerial monitoring committee, and there will be a study formed for the possibility of an exit strategy… before June,” he told reporters.
The Organization of the Petroleum Exporting Countries and non-OPEC producers led by
Russia have agreed to extend oil output cuts until the end of 2018 as they try to clear a global oil glut while signalling a possible early exit from the deal if the market overheats.
OPEC meets next in June, while the next meeting for the ministerial monitoring committee, known as the JMMC, is due to be held in January in Oman.
Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival US shale firms don’t boost output further.
Moscow needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock
market listing for national energy champion Aramco next year and would hence benefit from pricier crude.
Russian Energy Minister Alexander Novak said that it was too early to talk about
a possible exit from the glo-
bal deal to cut oil produc-
tion, and the eventual withdrawal from the agreement should be gradual.
Novak said the process of exiting the deal may take between three and six months, depending on how the global oil market
has recovered by then, and on the scale of oil demand.
Under the current deal the producers are cutting supply by about 1.8 million barrels per day (bpd).
“We can discuss this (exit) at any moment, as soon as we deem it necessary,” Novak told reporters, echoing comments from his Saudi counterpart, Khalid al-Falih.
OPEC would examine progress on the deal – which has already sent oil prices above $60 per barrel and reduced global oil stockpiles — at its next regular meeting in June.
Novak, on a visit to Iraq, said the process of exiting the deal may take between three and six months, depending on how the global oil market has recovered by then, and on the scale of oil demand. Novak also said Iraq has offered Russian construction companies the chance to take part in the construction of a new oil pipeline from Kirkuk to the Turkish port of Ceyhan.
The new pipeline will rep-lace an old, badly damaged
section of the Kirkuk-Ceyhan pipeline. It will start from
the nearby city of Baiji and
run to the Fish-Khabur border area with Turkey.