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Russia’s energy minister doubts oil price will get back to 2014 level

December 21, 2016, 11:59 UTC+3
According to Novak, oil prices are unlikely to surge to the level of 2014 of more than $100 per barrel, as the market has changed a lot
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© Viktor Drachev/TASS

MOSCOW, December 21. /TASS/. The oil price is unlikely to get back to the level of 2014 of more than $100 per barrel, Russia’s Energy Minister Alexander Novak said in an interview aired by the Rossiya-24 TV news channel on Wednesday.

"We’re unlikely to see the (oil) price hike to the level of 2014 of more than $100 per barrel as the market has changed, new technologies have emerged, reducing oil production costs and raising efficiency," he said.

According to Novak, "oil prices have stabilized in the range of $50-55 per barrel."

"This is good for the oil and gas market in order to ensure long-term investments in the sector, which by the way have dropped by around $500 bln over the past 2.5 years. I think that if oil prices keep at this level both consumers and producers will benefit," he said.

Novak expects oil prices to be around $60 per barrel over the short run, but does not rule out "upward volatility." "In case of a substantial deficit on the commodities market [prices may go up - TASS], we’re still unable to project the effect of investment reduction by $500 bln on future supplies. Though, if we estimate fundamentally the balance between demand and supply this is the level between $50-60 per barrel," he said.

On December 10, OPEC and non-OPEC countries signed the agreement on joint reduction of oil output at a meeting in Vienna on December 10. Also, 11 countries will join the announced cut by OPEC members of 1.164 mln barrels per day in the first half of next year, and reduce production by another 558,000 barrels per day. Thus, the total crude oil production cut will amount to 1.7-1.8 mln barrels per day. Russia plans to cut its oil production by 300,000 barrels per day in the first half of next year.

Russia’s Energy Minister Alexander Novak said earlier that Russian companies that produce 90% of crude oil had confirmed their readiness to cut production in the first half of 2017.

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