Bloomberg found out about the refusal of Russia to increase oil production
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Russia has no plans to increase oil production, reports Bloomberg, citing an official from the relevant ministries. The interviewee attributed this to the huge oversupply in the market, so that Russian companies, in such conditions it makes no sense to increase production. Interestingly, it was unnecessary for the possibilities to increase oil production Moscow has unleashed an economic “war of attrition” with Riyadh, which only accelerated the fall in oil prices and put the Russian economy on the brink of disaster.
Bloomberg called the recent decision of the Russian authorities potentially peaceful, however an anonymous official said that Russia is not negotiating with Saudi Arabia about the end of a price war. About this said on Wednesday the press-Secretary of the President of Russia Dmitry Peskov.
Russian energy Minister Alexander Novak said that Russian companies are able to increase production by 0.2‒0.3 million barrels to 11.6‒11.7 million barrels per day, less than 3%. At the same time, Saudi Aramco has announced plans to increase supplies to the market from 1 April, once a quarter, to 12.3 million barrels, RBC. At the same time, the Saudis have shown a willingness to trade crude oil discounts. In such circumstances, Russia is clearly unable to compete with the Arabs.
the energy Ministry said on Wednesday that its head held talks with his counterpart from the United States Dan Bruyette. “Ministers noted that the drop in demand and excess in the oil market do not contribute to the progressive development of the world’s energy and create risks of stable supply of the market after the start of the recovery in the world economy”, – stated in the message Department.
March 30, the state of the oil market after a sharp fall in world oil prices discussed by telephone the presidents of Russia and USA Vladimir Putin and Donald trump. The American leader on the eve of the conversation with Putin said in an interview that Saudi Arabia and Russia went crazy and he intends to discuss this issue with the Russian President.
According to analysts, by the summer of to store the oil will be nowhere. Of the three largest world oil producers Russia has the least amount of available storage is approximately eight days. These figures are based on the volume of production that can be saved if the export runs out. Saudi Arabia has in reserve for 18 days, and in the US for 30 days. Now oil give free and sometimes even pay extra to consumers.
the Glut in the oil market is due not only to the pandemic of mers because of the combat which stops production and falling consumption, but also the beginning of the economic “war of attrition” between Saudi Arabia and Russia. It provoked a demonstrative RF output of the transaction OPEC+ 9 March meant Moscow’s desire to increase oil production. In the context of the pandemic and the beginning of the economic crisis the experts evaluated this step as a suicide. It was clear that Russia’s withdrawal from OPEC+ said the Rosneft CEO and Putin’s friend Igor Sechin.
After the demarche of the Russian Federation similar decisions about increasing oil production began to take other exporters. This has led to an even more dramatic drop in the price of oil, which Moscow more and more difficult to sell for other reasons. So, China started to abandon hydrocarbons “Rosneftti” because of U.S. sanctions against Russia.
Experts believe that even the first effects of the “oil war” for Russia are disastrous. However, in the Kremlin deny it.
March 9 the price of a barrel of Brent crude oil fell by 24.1% and 30 March fell below 22 dollars. Less than two weeks, a barrel of Brent fell in price by more than 40% since the beginning of the year three times (8 January crude oil was trading around 72 dollars per barrel). In the middle of the day 1 April Brent traded in the range 24 to 27 dollars per barrel.
Russian Urals after the breakup of OPEC agreements+ in less than a month fell from 50 up to $ 13 per barrel by March 30. This is the minimum level of prices for Russian oil since 1999. In fact, oil export price has become negative, the Daily Storm. In these conditions in Russia and decided to at least stop to increase production.