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OPEC and its partners should start increasing oil production to keep the market well supplied and prices reasonable, Gazprom Neft’s chairman Alexander Dyukov said, as quoted by Reuters. Dyukov’s statement echoes Moscow’s reluctance to agree to an extension to the cuts proposed by Saudi Arabia earlier.
Dyukov said a price range of between US$55 and US$65 per barrel was “acceptable” for Russian oil producers, adding that Gazprom Neft would be able to quickly step up production once the cuts are eliminated.
These remarks are in tune with some made earlier this month by Russia’s President Vladimir Putin, who told media that Russia is comfortable with lower oil prices than Saudi Arabia. They are also in tune with a comment by Rosneft’s Igor Sechin, who said the cuts affected Russian companies’ market share in favor of U.S. producers.
“Does it make sense (for Russia) to reduce (oil output) if the U.S immediately takes (our) market share?” Sechin said. “We have to defend our market share.” The executive went on to say Rosneft would demand compensation from the Russian government if the cuts were extended.
As the date of the next OPEC+ meeting in early July approaches, we’ll probably hear more remarks like this. Russian producers never really go on board with the cuts and it was only the large-scale contamination of the oil flow along the Druzhba pipeline into Europe that forced them to shrink production enough to fall within the quota agreed with OPEC.
At the same time, chances are the higher-price camp will also step up its efforts to convince everyone the cuts will do them good: the latest sign in this direction was how oil prices behaved after the news broke of new tanker attacks in the Gulf of Oman. Although they jumped by about US$3 initially, prices started retreating on the same day.
At the time of writing, Brent crude was trading at US$61.43, with WTI at US$52.20 per barrel.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.