Novak: oil market may become balanced in June or July

The global oil market may become balanced at the end of June or in early July, Russian Energy Minister Alexander Novak said in an interview to Rossiya 24 television channel broadcast following a meeting of the OPEC+ Joint Ministerial Monitoring Committee (JMMC).

"We are close to reaching at least a balance of supply and demand at the end of June or maybe at the beginning of July as we see the continuous growth of demand together with lifting of anti-crisis measures and self-isolation regimes in many countries, together with the opening of borders and increase of transportation by car transport and air travel," the Russian minister said.

There are negative moments, including forecasts about a second wave of the coronavirus epidemic in some regions, but combined demand for oil in the world is rising thanks to the OPEC+ deal, he said.

Novak noted that OPEC+ states complied with output reduction under the deal by 87% in May, some states of the alliance failed to reduce their output by a total of 1.3 million barrels a day. All countries of the alliance confirmed their intent to raise compliance to 100% and compensate for their May failures.

The current oil price of $40 per barrel is an objective reflection of the real situation, the minister said.

According to him, the global oil market may become balanced at the end of 2020 or at the beginning of 2021 by average 5-year figures of commercial oil reserves.

“Given the current growth of demand and compliance with the deal, at a time when the countries outside OPEC+ register contraction by about 3.5 million barrels (a day of oil production), we may reach a balanced market quite fast given these dynamics. We may reach it at the end of this year or at the beginning of next, I mean reduction of the remainder (reserves) to an average 5-year level," the Prime news agency cited Novak as saying.

The OPEC+ cartel said in a statement that the next meeting of the JMMC would be held on July 15 after a July 14 meeting of the technical expert committee.