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Minister: Moscow-Riyadh deal increases chances for consensus on oil output freeze

September 08, 2016, 11:15 UTC+3

Russian energy minister added that the current figures of oil production in Iran also contribute to reaching an agreement on oil production freeze

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© Viktor Drachev/TASS

MOSCOW, September 8. /TASS/. The agreement between Russia and Saudi Arabia will contribute to consensus among oil producing countries on stabilization of oil market, Russia’s Energy Ministry Alexander Novak has told TASS on Thursday. 

"The fact that the two countries, producing over 22% of oil in the world, have come to agreements, should give a positive signal to the market and contribute to a consensus among countries within and outside of OPEC," he said.

He also added that the balance between supply and demand on the oil market remains, and investments in the industry decreased by about $200 bln annually. 

"Today we see that the rebalancing of the market lingers on, there is a decrease in investments in the sector, which is about $200 bln a year. As a result, now we are witnessing a negative trend in indicators for geological exploration and growth of reserves, and in the future we may even face oil shortage," the minister said.  

As for the forecasts of the Russian Energy Ministry, global demand for oil will increase this year by 1.1-1.3 bln barrels: 

"Earlier, we talked about the fact that the balance of supply and demand of oil will be reached only in 2017, we retain these projections. In general, we expect that demand will increase by 1.1-1.3 mln barrels compared to the previous year," Novak has stated.

Iran and oil prodiction freeze meeting in Algeria

The current figures of oil production in Iran contribute to reaching an agreement on oil production freeze, Alexander Novak explained.

"We cannot be hundred percent confident that such an agreement will be reached, but there is a number of factors, including Iran's oil production level, saying that such a possibility exists," he said.

On September 26-28, Algeria will host the International Energy Forum, where oil exporting countries can hold talks on the production freeze. The initiators of the discussion are Venezuela, Ecuador and Kuwait. Ministers of Saudi Arabia, Iraq and Iran have already confirmed their participation in private talks.

According to Novak, the freeze of oil production will help the market find the supply and demand balance, resume investments and avoid shortage of oil in the future. The minister added, however, that the discussion of "freezing" of oil production is not on the agenda of a meeting between Energy Ministers of Algeria and Russia.

"As for the freezing of oil production, the discussion of this topic is not on the agenda." 

On September 5, on the sidles of the G2-summit in China, Russia and Saudi Arabia signed a joint statement aimed at stabilization of the oil market. The countries were discussing the freezing of oil production for the period from 3 to 6 months.

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