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MOSCOW - Russian Energy Minister Alexander Novak said on Tuesday oil markets would start balancing out once an output deal takes effect in May while no significant rise in prices is likely in the near future due to high levels of global storage.
The Organization of the Petroleum Exporting Countries and other large oil producers including Russia have agreed to cut output by almost 10 million barrels per day (bpd), or 10% of global oil production, in May-June.
Additional cuts are expected from countries such as the United States, Canada, Norway and Brazil to combat the fallout from the global spread of the novel coronavirus that has hit economic activity worldwide.
The main concern for the oil market is that demand has fallen further than even historically unprecedented planned output cuts and storage for all the unused oil being produced is shrinking quickly.
Fuel demand is down 30% globally, and storage is becoming precious, with roughly 85% of worldwide onshore storage full as of last week, data from intelligence firm Kpler showed.
"However, you shouldn't wait for a significant rise in the price of a barrel in the nearest future due to high inventories," Novak told a ministry's inhouse magazine published on Tuesday.
The oil markets have fallen for eight of the past nine weeks. [O/R]
Novak also said that he is counting on an economic recovery in China, a leading energy consumer, to help balance out the oil market.
"We hope to see positive changes in the economies of other countries," Novak said.
Russia started pipeline gas deliveries to China in December as part of efforts to diversify away from commodity exports to Europe, its main consumer of oil and gas.
The market share of Russian gas giant Gazprom in Europe exceeded 35%. Novak said the Kremlin-controlled company is able to keep its share at this level.
Russia also ramped up its liquefied natural gas production by more than 50% last year to 40.5 billion cubic metres thanks to the launch of the Yamal LNG plant controlled by Novatek.
Novak said LNG production increased by more than 17% in January-February from a year earlier.
The minister said Russian coal production and exports are likely to fall this year without providing any numbers.
(Reporting by Vladimir Soldatkin and Olesya Astakhova; editing by Jason Neely)