Russian President Vladimir Putin (R) shakes hands with OPEC Secretary General Mohammad Barkindo at the Russian Energy Week 2017 forum in Moscow, Russia October 4, 2017.

Sputnik | Kremlin | Reuters

Russian President Vladimir Putin (R) shakes hands with OPEC Secretary General Mohammad Barkindo at the Russian Energy Week 2017 forum in Moscow, Russia October 4, 2017.

Market-watchers have long been wary of Russia’s commitment to the deal. The nation’s oil and gas giants are seen as reluctant participants in the agreement, which began in January 2017 and aims to keep 1.8 million barrels a day off the market through the end of the year.

Russia vowed in 2016 to cut its output by 300,000 barrels, but unlike the state-owned oil companies typical of OPEC, Russian energy giants are publicly-traded enterprises with shareholders.

The head of Russia’s Gazprom Neft on Friday said producers could adjust their commitments under the deal as soon as next quarter, Reuters reported. Gazprom CEO Alexander Dyukov said he hoped producers would agree to raise output since the market has essentially balanced after years of oversupply.

While it’s true many analysts believe oil supply and demand have reached a state of equilibrium, OPEC’s official goal is to shrink stockpiles of crude oil to the five-year average. On Monday, OPEC said inventories remain about 109 million barrels above that level. It warned the deal might not achieve its objective until the end of 2018.

Barkindo said it is in the interest of OPEC, Russia and other non-OPEC producers to continue coordinating policy even after the market rebalances.

“This is a work in progress and we are confident that a global forum such as the Declaration of Cooperation will serve as an insurance against future severe volatility and downturn that we had seen beginning in the autumn of 2014,” he said, referring to the start of a punishing three-year downturn in oil prices.

“I think we have learned enough lessons, and we are beginning to put some building blocks in order to institutionalize this partnership,” he said.

Asked whether he could see OPEC members fighting among themselves and with the United States for market share in Asia, a key demand center, Barkindo said the concern to the contrary is whether producers have invested enough in projects to bring new supply online to meet future demand.

OPEC on Monday raised its forecast for demand growth in 2018, but also said it now sees output from the United States and other non-OPEC member nations rising faster than the cartel initially anticipated.

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