A decline in crude oil supply after 2020 could lead to higher prices, the Russian Energy Ministry said in a draft energy strategy document.
The same document, however, also saw a bleaker future for oil demand, forecasting that it will slow in the coming years and maybe peak before 2030, TASS reported, quoting the draft strategy.
“Demand for oil products will be formed under the influence of growing consumption in the transport sector simultaneously with decreasing demand in the household and commercial sectors, as well as in the electric power industry," the draft also said.
Even if prices fall a lot further, however, Russia will have commercially viable reserve sufficient for three years, in a scenario with oil prices at $25-30 per barrel. That’s what Finance Minister Anton Siluanov said earlier this week, suggesting there was such a possibility.
"Since oil prices are unlikely to increase dramatically, then if the restrictions on oil production are not reached with OPEC countries, there are, of course, risks that prices may drop to $25-30 per barrel,” Siluanov told media. “Our budget policy allows us to circumvent these risks for up to three years, fulfilling all our obligations with accumulated reserves,” he added.
Russia is notoriously wary of oil price fluctuations and has been making its annual budgets based on substantially lower than actual prices. The base price in the 2019 budget, for example, was about $41.60 per barrel.
Meanwhile, wherever prices go, Russia’s Energy Ministry expects the country’s total output to average around and slightly above 11.2 million bpd until 2024, according to the draft strategy document. That’s the same average output level that Russia recorded last year. The expectation suggests that Moscow does not expect any further deepening of the production cuts it agreed to implement alongside its OPEC partners to stabilize prices.
By Irina Slav for Oilprice.com
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