Economy

Russian Federation warns of 'great risk' of oil overproduction

Russian Federation warns of 'great risk' of oil overproduction

Novak was speaking at a joint briefing with Saudi Energy Minister Khalid al-Falih, who was in Russian Federation for meetings with Novak and Vladimir Putin, weeks before OPEC and its Russia-led partners are set to decide how to proceed with their oil market management policies in place since 2017.

OPEC is now scheduled to meet in Vienna on June 25 to decide output policy for the rest of the year.

"Over the past week or so our economists have revised down their GDP growth outlook for the U.S., China, India and Brazil", Barclays bank said on Monday in a note about the economy and its impact on oil demand.

On Monday's (June 10th) market, crude rally was nearly entirely goaded by a signal of OPEC-kingpin Saudi Arabia, that the club of oil producers including Russian Federation would restrict supply to current level beyond June in order to balance a stormy crude oil market amid an intransigent USA inventory rise.

"Today there are big risks of oversupply", Russian Energy Minister Alexander Novak said in the Russian capital, where he talked with his Saudi counterpart at a meeting of the countries' intergovernmental commission.

The U.S. Energy Information Administration cut its 2019 world oil demand growth forecast by 160,000 barrels per day, to 1.22 million Bpd (Mmbpd).

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The pact ends this month and the group meets in coming weeks to decide their next move, which sources said would most likely involve rolling over the existing cuts.

While Russia may be happier with a lower oil price than Saudi Arabia, the OPEC+ accord has boosted its federal budget amid higher prices for energy commodities.

OPEC is close to reaching an agreement to extend the production cut deal beyond June, al-Falih said on Friday from Russian Federation, adding that the sticking point is now to calibrate the cuts with the non-OPEC group of producers led by Moscow.

Stock markets rose on Monday after a deal between the United States and Mexico to combat illegal migration from Central America late last week removed the threat of US tariffs on goods imported from Mexico. Massive drops in exports by Iran and Venezuela plus the agreed output cuts implemented by the Opec+ group since January, have cut supplies.

The two ministers yesterday discussed postponing the next OPEC meeting to 4 July, instead of 25 June, according to Novak.

President Vladimir Putin has shown he is reluctant to walk away from the agreement, which also ensures his political partnership with Saudi Arabia as economic ties tighten.