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Period of low oil prices may extend beyond 2016-2017 if output not stabilized — minister

February 25, 17:48 UTC+3 MINSK
The imbalance of supply surpassing demand will go down quicker if at least production is not increased, if the majority of countries do not boost output, the Russian Energy Minister says
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© EPA/PAUL BUCK

MINSK, February 25. /TASS/. The period of low oil prices may extend for 2016-2017 and further on if output is not stabilized, Russia’s Energy Minister Alexander Novak said Thursday.

"Today, the imbalance of supply surpassing demand will go down quicker if at least production is not increased, which the four of us accorded in Doha, if the majority of countries do not boost output. In case the countries do not reach an agreement competition will increase. If those who are able to boost [oil production] continue boosting the cycle of low oil prices will extend to 2016, 2017 and further on. In case supply does not rise on the market, which is workable, we could cut the imbalance by 1.3-1.4 mln barrels per day by the end of 2016 or the beginning of 2017 whereas now it equals around 1.6-1.8 mln barrels as experts say," Novak said.

"Speaking about reduction it’s a more complicated mechanism though it could have been more efficient. Each country has different reduction potential. Second, it’s also very difficult to define the base for slashing as the output structure has seriously changed since the moment (oil) prices went down, meaning summer 2014, as some countries boosted production while others kept their output level unchanged," the Minister said.

"The market has to respond itself to reduced imbalance. Speaking fundamentally prices cannot exceed $50-60 per barrel as in this case strong investment activity will be back, bringing back projects, which are now facing reduction of investment and production volumes while prices will go down again. So we think $50 (per barrel oil) price is most reasonable from the viewpoint of demand-supply balance," he added.

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