Norway to Continue Cuts Until June
Einar Steensnaes, Norway's Oil and Energy Minister, said on Wednesday that they planned to uphold their current oil output curbs until the end of June, despite recent rallying oil prices. He said he expected oil companies to comply with Oslo's promise to trim production by an average 150,000 barrels per day to 3.02 million bpd in the first quarter and that he saw no current need to extend the curbs beyond the end of June. "At the moment, it is not an option to lift the output regulations before the end of the first half of the year," Steensnaes said in a statement. "We have to accept certain swings in the oil price."
IPE Brent crude surged to new six-month highs on Tuesday, fuelled by concern over Middle East unrest disrupting oil flows. Prices slipped back to just below $27 early on Wednesday after a steep rise in U.S. stocks. Steensnaes said much of the recent surge in oil prices was attributable to political turmoil, rather than a fundamental imbalance in the market. "A big part of the price rise can clearly be attributed to a war premium, about $2-5 according to some players," he said, saying that was not a reason to drop the regulations. "If we end up in a situation where production doesn't meet increased supply, then we would evaluate our production regulations. We are not in that situation now," he said.
Steensnaes said that a decision would be made before the end of June on whether to extend the production cuts into the remainder of the year. Steensnaes is scheduled to visit Moscow on April 6-9 to meet his Russian counterpart Igor Yusufov, according to the minister's itinerary issued on Wednesday. Russia is also expected to lift its oil curbs after the end of June.
Norwegian figures for the first two months showed Norway produced an average 3.12 million bpd, meaning March output would have to be as low as 2.83 million. First quarter oil output figures are due later in April. Norwegian oil companies said last month they were starting to close oilfields to help Oslo achieve the promised five percent oil output curb. "I have seen that oil companies in a satisfactory manner are meeting the regulations and I expect the figures for the first quarter, due shortly, to show production is down at around 3.02 million (bpd)," Steensnaes said.