The current situation in the oil market with prices plummeting is tough, but the market shouldn't be judged by a one-day or even a week-long slump, Vladimir Putin's Press Secretary Dmitry Peskov said on Wednesday, calling for patience and an assessment of the market when the new OPEC+ agreement takes effect on May 1.
"We need to wait. The dynamics of global oil prices is really negative, the current situation is not easy, but one should assess it as a whole not by one day and not even by one week, but in a longer perspective. Therefore, now we just have to wait," Peskov told reporters in Moscow, as carried by Russian news agency TASS. Peskov was answering a question about whether Russia would consider taking additional measures in light of the relentless drop in oil prices, with US benchmark oil prices slumping 300% to a negative -$37 a barrel on Monday.
Russia and its now friends-again OPEC agreed earlier this month to take 9.7 million bpd off the oil market in May and June in an attempt to stop the freefall in prices slammed by the massive demand loss in the pandemic.
Analysts and the market, however, do not believe the OPEC+ cuts will be enough to prevent global storage overflowing by end-May at the latest, considering that the current demand collapse is around 30 million bpd- three times higher than the promised OPEC+ cuts.
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Early on Wednesday, prices continued to drop, with Brent Crude crashing to its lowest level this century-to the lowest price level since 1999, before clawing back most of the losses for the day.
On Tuesday, Saudi Arabia hinted for a second time in two weeks that it was ready to take further measures with OPEC+ to restore oil market stability.
Also on Tuesday, Russian Energy Minister Alexander Novak said in a statement that the pressure on the highly volatile oil market would continue until the start of the OPEC+ cuts in May until production in the countries outside OPEC+ starts coming off the market and until countries begin easing lockdowns. Attributing Monday's plunge of the WTI Crude May contract to the expiring futures contract and lack of storage, Novak said there was no need to dramatize the situation. OPEC+ countries are following the market closely, and they have all the instruments to react, if necessary, Novak said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More