Russia is ready to sell crude oil at pretty much any price, but only to friendly countries, Energy Minister Nikolay Shulginov told Russian news agency Interfax.
Commenting on oil price forecasts, Shulginov said that these will need to be revised soon in light of the changes in the geopolitical and economic situation. He added that while a price range of between $80 and $150 per barrel of crude was possible, Russia was ready to sell its oil at any price range because its priority was to keep its oil industry going.
"A price range of $80 to $150 per barrel is generally possible," Shulginov told Interfax, "but it is not our job to play guesswork with prices. Our job is to ensure the continue operation of the oil industry. We are ready to sell friendly countries oil and oil products at any price range."
Separately, commenting on news about foreign companies' exit from the Russian energy industry, Shulginov said this exit is, for now, hypothetical. These companies, he said, would first need to find a buyer for their Russian business.
The minister's statement suggests sanctions, although not directly targeting Russia's oil industry, are beginning to bite. With lower sales due to the sanctions, Russia may soon need to start shutting down wells because it is running out of storage space, and new facilities are being built with haste.
The limited storage capacity has been a problem for a while but has only come into the spotlight now that Russian oil cargos are being shunned by Western buyers. According to the International Energy Agency, Western sanctions could reduce Russian exports by some 3 million barrels daily this quarter.
This would mean a 3-million-bpd shortfall in global supply with no immediate replacement. Also, if fuel exports are included, the shortfall could become even greater, as OPEC's secretary-general warned the EU this week during talks in Vienna.
"We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions," Mohammed Barkindo said. "Considering the current demand outlook, it would be nearly impossible to replace a loss in volumes of this magnitude."
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Oil Sands Financing From Canadian Banks Doubles
- India’s Russian Dealings Have Left Biden’s Geopolitical Oil Strategy In Tatters
- Tight Oil Markets Are Sending Fuel Margins Through The Roof