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Too many uncertainties in oil market to commit to further cuts: Russia's Novak

Moscow — Russia is not ready to commit to further production cuts under an OPEC/non-OPEC supply accord, with the oil market facing many uncertainties in the months ahead, the country's energy minister, Alexander Novak, said Monday.

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"Lots depends on the market situation in the second half [such as] sanctions [and] trade disputes, so today we are discussing it," he said at a press briefing in Moscow, where he was meeting Saudi counterpart Khalid al-Falih at a Saudi-Russian economics summit.

"We think we need to continue to monitor the situation and see what happens in June so we can take a balanced decision in July."

US sanctions on Iran and Venezuela are likely to tighten the market, many analysts forecast, while US-China trade tensions could dampen global oil demand.

OPEC and 10 non-OPEC partners, led by Russia, agreed in December to cut a combined 1.2 million b/d in the first half of 2019. Falih has urged the coalition to extend the cuts, saying global inventories were still too high.

Almost every member of the 24-country coalition is on board with a rollover of the agreement, except for Russia, which has been vacillating over how much production it was willing to cut, Falih said in an interview with Tass news agency earlier Monday.

"All the big producers in OPEC, as well as many non-OPEC countries like Oman, Kazakhstan, Azerbaijan have also supported the extension," Falih said.

"The remaining country to jump on board now is Russia. I will wait for the Russian dynamics to work themselves out. There is a debate obviously within the country about the exact volume that Russia should be producing in the second half."

The coalition has yet to decide when it will meet to address the supply accord. OPEC originally scheduled its regular semi-annual meeting for June 25 in Vienna, with non-OPEC partners to join the talks the following day. But Russia has pushed for the dates to be changed to July 3-4, with Algeria, Iran and Kazakhstan opposed.

Falih said he may meet Novak again at the G20 meeting in Japan on June 28-29, "to further calibrate our positions".

Despite Russia's wavering on its cuts, both sides said they remain committed to continuing cooperation on managing the oil market. OPEC has for more than a year been developing a charter to formalize its partnership with its 10 non-OPEC allies, which officials say they hope to sign at the next meeting.

The charter has been delayed over disagreements on how structured or loose to make the OPEC/non-OPEC coalition.

"The current status of the international oil markets, which are volatile once again, makes the Saudi-Russian cooperation all the more important," Falih said in a speech at the Moscow summit.

"That is why we look carefully forward to the possibility of creating a permanent charter of action for future collaboration in international markets between the big oil producers."

-- Herman Wang, herman.wang@spglobal.com

-- Edited by Dan Lalor, daniel.lalor@spglobal.com