Novak: Uncertain oil market may be clarified in May-June

In May, many countries can start the process of restoring business and abandoning quarantine measure, which will affect the increase in demand for oil, Report quotes Russian Energy Minister Alexander Novak, as saying in his interview to Gazeta.ru.

"But there is still a lot of uncertainty: how the OPEC + deal will work from May 1, how it will affect, whether countries will fulfill their commitment to cut production."

According to the Minister, many non-OPEC+ countries have declared their readiness to contribute to production cut. So far, due to the lack of official decisions, the market does not take into account these volumes. However we can talk about quite large volumes, from 5 to 10 million barrels per day, which may leave the market due to cuts in major countries: the United States, Canada, Norway, Brazil, Colombia.

"It is obvious that unless the situation becomes more certain, we will face a period of low prices. We need to experience it. If today we see a decline, it does not mean that prices will always be like this." He stressed that now the demand for oil has fallen from more than 100 million barrels per day, according to various estimates, to 70-80 million barrels, in other words, 20-30 million barrels per day.

The Energy Minister expressed hope that the situation will become more evident in May-June, but it will take time to balance the market: "I want to believe that the end of the year will balance the market. The reduction of stocks in storage should begin in the second half of this year. However, in the current times of price uncertainty, it makes no sense to forecast."

Notably, on April 12, OPEC+ Economy Ministers reached an agreement to reduce oil production in May-June 2020 by 9.7 million barrels per day.