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Oil prices in the long-term will be $50 a barrel according to Russian Energy Minister Alexander Novak, who noted that the current $70-80 oil price is driven by sanctions and will be temporary.
The expectation for a longer-term oil price at $50 per barrel is based on projections by oil companies and analysts, the Russian minister said, as carried by Reuters.
Novak also indicated that he expected Russia’s oil production to average 11.105 million bpd this year.
Last week, the Russian minister told Bloomberg in an interview that Moscow was ready to pump at record levels should the oil market require it. Russia hasn’t made any decision on production levels yet, Novak stressed, but added that Russia and its OPEC partners in the production cut deal would discuss production at the meeting in Algiers this coming weekend.
Russia is capable of adding 300,000 bpd to its production within a year, Novak said last week.
Earlier this week, the Russian minister said that the Algeria meeting could discuss all kinds of production scenarios.
Russia has already reversed most of its own production cuts as part of the deal, and has been keeping production at near record levels in its post-Soviet history.
OPEC’s leader and largest producer, Saudi Arabia, however, has so far shown production increases lower than the ones it initially hinted at in June.
The Saudis are said to now be comfortable with the current oil price level and even with Brent Crude rising past $80 a barrel, at least in the short term, as the oil market and global supply adjusts to significantly reduced Iranian oil exports, Bloomberg reported on Tuesday, citing people familiar with Saudi Arabia’s thinking.
Higher oil prices are also a boon for Russian producers who benefit not only from the higher dollar price of oil, but also from the weaker ruble against the U.S. dollar, which additionally lifts the oil price in rubles.
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.