Novak called the new online meeting OPEC+

the Global economy is going through a very volatile period, and it affects the oil market, said at a meeting on the situation in the global energy markets, chaired by the President, the Minister of energy Alexander Novak. “Today, oil is trading in the range of 25-30 dollars per barrel. Most volatility, up and down every day, in fact, we see ten or maybe more percent going fluctuations in the price of oil. The fall from the beginning of the year amounted to almost 60 percent,” he said.

the Minister said the factors that most affect the market. The first and most important pandemic and coronavirus measures to limit the spread of the virus, which led to a sharp decline in economic activity and limitation of mobility of citizens, a drop in demand for oil and oil products.

Photo: iStock energy expects deterioration of the situation in the oil market in the near future

Reducing demand is of the order of 10-15 million barrels per day. And, according to experts, in the next few weeks it can be reduced to 15-20 million barrels a day. “That’s about 20 percent of the total production in the world,” he said.

the market now is not understanding where can be the bottom, and this factor dominates the reasons for the falling prices, continued Novak. “Such a sudden and massive decline in demand never had” – he compared.

the Most acute situation in the countries of the European Union, which consumes 18 percent of the world oil market and the US, where about 20 percent of global consumption. The demand for filling stations in different countries, 30-70 percent. It is known that about 60 percent of all oil consumption in the world is associated with transportation. Also dropped the demand for air travel. The world today is the fall is about 60 percent. That is, the loss in demand only in kerosene – about 4-5 million barrels per day.

an Additional factor was the unilateral decision of some countries to secularity market, the Minister continued. In Vienna on 6 March, Russia proposed to extend the restrictions in OPEC production+ at least for a quarter or for a month to assess the situation. Not Russia was the initiator of termination of the agreement. Unfortunately, the partners from Saudi Arabia actually withdrew from the agreement and announced a significant additional discounts on their oil, as well as plans for a sharp increase in production, stated Novak. In the conditions of sharp falling of demand is additionally influenced the drop in oil prices and continues to negatively affect the situation on the market.

there is a situation when the excess of overproduction, or unclaimed oil actually flows into storage and the ability to fill them there is still a half or two months. “While the current level of reserves will be record in history,” said the Minister. “In the case of approximation to a complete glut in possible unpredictable scenario for the industry, we can see even more significant drop in prices,” he suggested.

To restore stability in the industry need to make a decision on coordinated action for the reduction of the production volumes agreed with the head of state the head of Ministry. “It is important that the joint effort was attended by all major producers, including Russia, Saudi Arabia, USA and other countries inside and outside OPEC,” he said.

Putin called the decline in oil prices is a serious challenge for the country

a Key partner for the balance of the market should be the largest manufacturers, such as the United States, said the Minister. Actions should be aimed at meeting the interests of both producers and consumers, in order to prevent a sharp rise in prices as a result of possible shortages, he said.

Novak agreed with the President on the level of the need to reduce production to about 10 million barrels per day. “Production must be reduced over the next several months with a subsequent increase in the level of production as the global economic recovery, as the recovery of demand,” he said.

Monday, April 6, tentatively scheduled a conference call OPEC Ministers+. “We will continue working with our partners in order to reach agreement to stabilize the world energy market,” said Novak. The Minister also said that the company’s fuel and energy complex continue to work in full and provide the needs of the internal market in petroleum products. “Together, we are monitoring the situation and apply maximum measures and actions, in order to ensure a stable work of the companies in these difficult conditions”, he concluded.