Russia ready to raise crude output if needed

Output decrease in a number of oil producing countries keeps oil markets in uncertainty

Russia ready to raise crude output if needed Photo: kremlin.ru

Three months after the agreement on oil production cuts was cancelled, the market is still unstable, as not all the countries have managed to restore their output. Along with geopolitical tensions, it has helped oil prices reach $80 per barrel. However, Russia is ready to increase its production level, according to the country's minister of energy.

Global oil markets remain ''fragile'' due to geopolitics and production declines in several regions, but Russia can raise output if needed, says Reuters citing Minister of Energy Aleksandr Novak. At the moment, oil prices are wavering around $80 per barrel, which is by 33% higher than in February, thanks to supply disruptions and expected US sanctions against Iran.

Speaking at the Eastern Economic Forum in Vladivostok last week, Novak said that the fragility of the situation was related to the fact that not all the countries had managed to restore their market and production. ''We observe such a situation in Mexico, where the decline more than halved from the forecasts on 2018''. He also pointed out that Venezuela's output was falling quite strongly, by 50,000 barrels per day. Over the past year, Venezuelan oil exports have halved to little more than 1 million bpd amid a political and economic crisis. ''This means that the market is still not balanced in long-term perspective,'' explained the minister.

According to Aleksandr Novak, Russia plans to increase its share of global liquefied natural gas market to 20%. Photo: kremlin.ru

Oil markets are also depressed by the prospect of US sanctions against Iran's oil exports, which will be implemented from November. ''This is huge uncertainty on the market – how the countries, which buy almost 2 million barrels per day of Iranian oil, will act. Those are Europe, Asia Pacific region… There is a lot of uncertainty. The situation should be closely watched, the right decisions should be taken,'' Novak said.

According to the minister, Russia has potential to raise production by 300,000 bpd from the level of October 2016 when the country produced 11,247 million bpd. This month, the world's oil producing nations will meet in Algeria to discuss the present market situation and further cooperation, taking into account supply and demand forecasts for the rest of 2018 and the first half of 2019.

Novak also announced that Russia plans to increase its share of the global liquefied natural gas market to 20% thanks to abundant gas reserves. ''I am sure we will achieve this goal,'' said the minister.

By Anna Litvina