Russia will not increase oil production because it is not "practical" now

Russian oil companies will not increase crude production at this time, given that "it is not practical" in the current situation, with demand falling and prices falling, energy minister Alexander Novak said Thursday.

"In my opinion, it is simply not practical to do so in the current situation. Reasonable decisions are made by our companies," he said in an interview with the Moscow radio station Eco, in which he spoke so clearly for the first time about the Russia plans after the failure of the OPEC + alliance meeting in March in Vienna to further cut production.

Novak, who discussed the situation in the international and national market with the directors of Russian oil and gas companies on Wednesday, stressed that Russian companies have already placed their oil for April, despite the low price and even when the consumption of European refineries It has fallen.

"Our analysis is that the situation will worsen over the next few weeks and demand will continue to drop," he said.

He acknowledged that the price of oil - Brent was trading today at $ 27.35 after recovering 10.1% - "does not satisfy anyone."

"We do not rule out the price falling further, because the situation (which has occurred) is unprecedented, it never happened, but that does not mean that the price remains low for a long time," he predicted.

The energy minister noted that the additional production cut agreement on the table in Vienna between OPEC members and independent producers "would have absolutely no effect under these conditions, including Saudi Arabia's proposal to reduce ( extraction) at 1.5 million barrels per day. "

He also indicated that the announced increase in production in Riyadh has yet to be verified in reality.

"I am not sure that our colleagues have started to increase production. It will have to be done with the data in hand rather than through verbal interventions."

"It is very difficult to accommodate excesses in volumes now, even though crude oil from Saudi Arabia and Russia are the most competitive in terms of costs. Day after day it is more and more difficult to place (oil)," he said.

In Novak's opinion, the current situation in the oil market will only change when there is an increase in demand.

He also argued that no redistribution is taking place in the global oil market, because the actors are simply trying to resist in this crisis.

He also did not exclude the possibility of negotiations with Saudi Arabia "if there is interest in countries outside OPEC +" for it.


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