The current downside oil price trend can be reversed only if the member states of the Organization of Petroleum Exporting Countries (OPEC) reduce their oil output quotas considerably.
Russia’s oil output and export cuts won’t cause world oil price rises. It is logical for Russia to expand its output in the period of low oil prices to build up its share on the world market, experts of the fuel and energy sector polled by TASS said on Thursday.
The current downside oil price trend can be reversed only if the member states of the Organization of Petroleum Exporting Countries (OPEC) reduce their oil output quotas considerably. But no extraordinary OPEC meeting has been planned.
Venezuela and Ecuador are among the OPEC countries that are urging the oil cartel to hold such a meeting. Venezuelan President Nicolas Maduro, in particular, has called on Russia on many occasions to join OPEC and influence oil prices.
"The surplus of oil output is too great amid falling consumption and the emergence of alternative sources of energy. Today the price of a barrel falls with such easiness, which has not been observed for already 30 years. It is absolutely useless to expect OPEC states to cut quotas on their own," said Fares Kilzie, head of Creon Energy, a Russian advisory firm.
‘We could rescue the oil price by cutting gas output and exports and prompting a growth in the gas price: these two prices are interrelated in formulas and baskets. This is the advantage, which all other exporters lack," he said.
Meanwhile, Vygon Consulting Managing Director Grigory Vygon said "Russia has never influenced the level of oil prices on the market and, therefore, potential cuts in our oil extraction won’t cause any considerable changes in oil prices."
"Moreover, technologically we have no possibility to change output volumes in the short term," he said.
"As oil prices are declining, talks have started on the need to hold an extraordinary OPEC meeting. Indicatively, in the fall of 2008, when the market was experiencing a previous price fall, the cartel held extraordinary meetings twice and both times took a decision on its output cuts, including by unprecedented 4.2 million barrels a day in December 2008. At that time, however, the market had no such surplus in supply we have today - about 2.5 million barrels a day," the expert said.
Meanwhile, East European Gas Analysis Director Mikhail Korchemkin told TASS the reduction in exports could have sense as part of coordinated efforts with OPEC.
"Russia has never cut oil exports amid falling prices. On the contrary, Russian oil exports were seen to increase when OPEC cut its supplies," the expert said.
The idea that an oil exporting country can radically change the oil price dynamics is a dangerous illusion, Director of the Commodity Economy Center at the Russian Presidential Academy of the National Economy and Public Administration (RANEPA) Pyotr Kaznacheyev said.
"Oil prices have fallen not as a result of a decision taken by one exporter country or even a group of countries. This is the result of a set of changes in the sector and world energy consumption," the expert said.
"A decision by one country cannot radically change the current trend either," he said, adding it was logical for Russia to build up output during the period of low oil prices.
"A reduction in output is a losing strategy," he said.
First published by TASS.
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