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Rosneft CEO expects new oil price records on the market

Igor Sechin also noted that sanctions make operations on the global oil sector unpredictable
Rosneft CEO Igor Sechin Sergei Bobylev/TASS
Rosneft CEO Igor Sechin
© Sergei Bobylev/TASS

ST. PETERSBURG, May 25. /TASS/. The global oil market may see new price records soon, Chief Executive Officer of Russia’s top oil producer Igor Sechin said at the St. Petersburg International Economic Forum on Friday, adding that the expectation is related not to OPEC+ deal, but to the policy of unilateral sanctions.

"The policy of sanctions and ultimatums applied to hydrocarbons markets will inevitably lead to a permanent ‘sanctions premium’ in the price. I do not rule out that we will be able to speak about a sanctions-related commodity ‘super cycle’ after a while, and see new price records in the near future," he said.

Consumers in the US and Europe will eventually pay the price for crude prices touching new level "as a result of the policy of unilateral sanctions pursued," Sechin added.

Sanctions make operations on the global oil sector unpredictable, Sechin said, adding that restrictions used for creating competitive advantages in real sectors of the economy are becoming common practice.

"Unfortunately, no market player or energy consumer can overlook exceptionally non-market factors, first of all various sanctions and restrictions today. As a result, the most dangerous factor for the sector’s development - unpredictability of environment - is rising. Using sanctions for creating competitive advantages in real sectors of the economy is becoming common practice," he said.

According to Sechin, legislative measures allow a loose interpretation by regulators and, forcedly, market participants. "I have to say that the US has consistently pursued the policy of non-acceptance of international agreements, which would allow challenging their actions on global platforms. In fact, judicial protection and fair market arbitration are off the table," CEO stressed.

Sechin said that Washington’s sanctions policy is particularly aimed at serving the interests of the US business.

"As we understand, measures (assumed by US - TASS) are a subterfuge, which has a legend of "supporting domestic market" behind it, but which in fact solves the task of not only protecting the interests of own business, but supporting its satellites on global markets. In fact, international law is violently breached, and market operations are invaded. The US sanctions are exterritorial and cover not only US companies, but any companies of any country of the world," he stressed.

Sechin also said that he expects oil and gas to remain core of global energy and economy in foreseeable future.

"Not only does it concern big producing countries, but big consumers as well. Regardless of commitment to development of alternative energy, oil and gas sector particularly remains a source of budget revenues for development of new technologies and green energy," he explained.

According to Sechin, oil market participants will have to replenish up to 40 mln barrels of falling volumes of resources per day by 2040, which will "require a stable and massive inflow of investment in the sector."

"Projections by leading analysts and companies, including an outlook on global energy development recently released by BP show that the demand for hydrocarbons will be higher by 2040 than it is today even in most challenging scenarios," he said.

The price of the futures contracts of Brent crude oil has added almost 20% year-to-date, exceeding the $80 per barrel mark first since November 2014. Earlier in the day, the price of the futures contracts of Brent crude oil for July 2018 delivery on London's ICE trading dropped by 1.03% to $77.99 per barrel.