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Global oil market to remain oversupplied until end of year — Russia’s Energy Minister

November 24, 2016, 10:39 UTC+3

The surplus emerged mainly due to the growth of oil production in the US

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© © AP Photo/Matthew Brown, archive

MOSCOW, November 24. /TASS/. Global oil market will be oversupplied by 1 mln barrels per day until the end of the year, Russia’s Energy Minister Alexander Novak said speaking at the International forum of the International Energy Efficiency and Energy Development Forum (ENES 2016) on Thursday.

"Until the end of the year the market will be oversupplied by 1 mln barrels a day," he said.

He said that in the beginning of the year the market was oversupplied by 1.8 mln barrels a day but later the balance of supply and demand began to equalize.

Novak also said earlier that the market will reach the equilibrium in the end of 2016.

The surplus on the oil market emerged mainly due to the growth of oil production in the US, where a sharp growth of shale oil output was registered. The oversupply of oil led to decline in oil prices that reached $28 per barrel in February.

According to Russia’s Energy Minister, the oversupply and low oil prices may lead to oil shortage in the future due to decline in investments in the industry.

Oil production freeze

The freeze of oil production for Russia is equivalent to a reduction of production by 200-300,000 barrels per day, as it deprives the company's ability to increase production in accordance with the plan, Energy Minister Alexander Novak told reporters.

"For us it is in fact a reduction of 200-300,000 barrels, because we planned growth (in 2017 - TASS)," he said.

"Russia's position is consistent, it has not changed, we are ready to freeze oil production at the current level. Our plan implies production growth, therefore, keeping it (production volume) on the current level, we contribute (to stabilization of the situation on the oil market)," Novak said when commenting the words of Azerbaijan’s Energy Minister Natik Aliev who said earlier that Russia was ready to cut oil production by 300,000 barrels a day.

Novak said that the news fields that were launched this year will be operating in compliance with the plan. Russian companies won’t restrict production on existing fields.

According to the Energy Ministry, between November 1 and 23, average daily oil production in Russia was 11.2 mln barrels.


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