Amid the coronavirus pandemic, oil demand has plummeted over the last few months but Russia’s oil minister sees the global supply and demand situation rebalancing within two months, according to RIA sources, cited by Reuters.

Russia’s Energy Ministry expects oil demand to improve in May, and notes that we are already seeing major shifts to global oil supplies, with production cuts—either purposefully or otherwise—rising to nearly 15 million barrels per day.

The global surplus, the energy ministry says, is between 7 million and 12 million barrels per day.

Reuters sources have indicated that OPEC+ wants to keep the existing production cuts beyond the current June expiry in order to rebalance the market.

Saudi Arabia and Iraq—two of OPEC’s largest oil producers, have reaffirmed their commitment to rebalance the oil markets. Saudi Arabia has pledged to cut an additional 1 million bpd on top  of its existing quota. Iraq, however, may find it difficult to achieve its promised targets.

The news that the Russian energy ministry sees the market rebalancing by July comes at the same time when Russia is considering banning all oil products imports, in a move designed to protect its oil refining industry at a time of decreased demand.

Russia has agreed to cut its oil production to 8.5 million bpd throughout the duration of the OPEC+ cuts. Normally, Russia’s adherence to its stated oil production quotas have been subpar, but this time, a lack of demand for crude has spurred the country into swift action.

The IEA last week said that it saw signs that the oil market would come into balance quicker than originally thought after the United States and OPEC brought their production lower—and lower more quickly—than most had anticipated.

Last updated on Tue., May 26, 2020.