26 February 2019, Baku — Azerbaijan, the third-biggest former Soviet oil producer, wants to see stability in oil prices before deciding whether to support any extension of global cuts in crude output, the country’s energy minister said.
The Organization of the Petroleum Exporting Countries and several other exporters, including Azerbaijan, are cutting oil production jointly by 1.2 million barrels per day (bpd) in an effort to stabilise oil markets and boost the price of crude.
The current arrangement runs until the end of June and is the subject of further discussion on whether it should be extended into the second half of 2019. For non-OPEC producers, Russia is leading the deal and making the biggest cuts.
“As for an extension of this arrangement to the second half of 2019, I’m in no hurry to make concrete statements,” Parviz Shahbazov told Reuters in an interview.
“In early February I would have said it was necessary to extend it, but today I think we need to see what will happen on the market as the oil price is rising now.”
Brent crude futures, the international oil benchmark, briefly reached $67.73 a barrel on Friday, their strongest since mid-November. On Monday, Brent was trading at around $65.50.
“We believe that price stabilisation at $60-$70 per barrel would be in the interests of both suppliers and consumers,” Shahbazov said.
Azerbaijan’s cuts are based on its September 2018 production level of 796,000 bpd. Shahbazov said Azerbaijan should be reducing its output by 2-2.5 percent under the global deal.
Azeri oil production stood at 793,000 bpd in January, higher than the final level under the deal of 776,000 bpd. The Energy Ministry says the cuts are a “technological process” that will be extended over the six-month duration of the agreement.
“The most important thing is political will and commitment to the agreement,” Shahbazov said.
“Not only Russia, but also a number of other states, including Azerbaijan, did not immediately proceed to 100 percent implementation, but went in that direction.”
OPEC and its allies gather on April 17-18 in Vienna to review the supply agreement. A panel that monitors the deal, the Joint Ministerial Monitoring Committee, meets in the Azeri capital Baku a month earlier.
Shahbazov said that in Vienna, meeting participants may set up a new structure to deal with issues related to the activities of OPEC and its allies.
Azerbaijan saw no need to become a member of OPEC, Shahbazov said. “At this stage, this issue is not relevant and is not being considered,” the minister said.