There is no need to take any action to halt the decline of oil prices that started a month ago, even though it accelerated sharply yesterday, with both Brent and WTI shedding 7 percent and more inside a day, Russia’s Energy Minister Alexander Novak said, as quoted by Reuters.
Novak was speaking at an industry event in Singapore and said, “The market is quite volatile today. We remember that the oil price was sharply rising in the same way, now it is going down. We have to look into long-term development, into how the price will be stabilized.”
The official’s comments come after Saudi Arabia’s Khalid al-Falih said that the Kingdom planned to cut crude oil exports next month by half a million barrels daily to stop the slide in oil prices, adding that OPEC should cut its combined production by 1 million bpd.
The Saudi minister’s latest statement was a stark change in rhetoric following signs of weaker demand and growing supply, the classic combination that served a blow to bullish traders, with benchmarks slipping into a bear market inside a month. Also, it followed reports that Saudi Arabia was discussing cuts with Russia.
Novak told media in Singapore that Russia had been pumping less oil since the beginning of the month after a record-high production rate of 11.41 million bpd last month, with the daily cut at 20,000 barrels.
Washington recently granted waivers to eight Iranian oil importers, and global oil demand forecasts suggest that the market could be in for oversupply—both factors that substantially contributed to the dive oil prices took, as did rising U.S. production. It may well be the case that Moscow is not opposed to lower oil prices—as it has indicated earlier as well—as they would eventually come to bite into U.S. shale drillers’ performance. U.S. shale drillers are the biggest production factor that OPEC and Russia cannot control, after all.
By Irina Slav for Oilprice.com
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