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Russia won't keep low oil profile

Rosneft CEO said there's a price war under way among global oil market players.

By Daniel J. Graeber
Russia won't keep low oil profile
Russia won't keep a low profile as oil players jockey for market share, the head of oil company Rosneft said. Photo by Pattie Steib/Shutterstock

MOSCOW, Oct. 21 (UPI) -- Russia is not going to keep a low profile in the global battle for a stronger presence in the oil market, the head of oil company Rosneft said.

The Organization of Petroleum Exporting Countries is pursuing a strategy that calls for a freeze, or possibly a cut, in production levels in an effort to erase the surplus that helped push crude oil prices to below $30 per barrel.

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A report published in July by the Norwegian government found previous strategies from OPEC to defend a market share may have led to a decline from rival producers. The report from Statistics Norway found OPEC behavior "probably" limited the role of U.S. crude oil producers.

Writing in the Italian daily newspaper Corriere della Sera, the CEO of Russian oil company Rosneft, said the maneuvering by major producers like OPEC was a price war.

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"What is the purpose of the current price war? I think that, in the first place, it is a competition for a market share," he wrote. "And Russia is not going to keep a low profile."

Rosneft said its oil production could increase by up to 20 percent next year.

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Sechin, a close ally of Russian President Vladimir Putin, said there are no market forces standing in the way of an increase in Russian oil production long term. Any surplus under normal conditions, however, should evaporate over the next year and a half.

RELATED Russian oil company sends mixed signal on supply issues

Sechin said from an energy forum in Vienna this week that, from his perspective, crude oil prices should move steadily beyond $55 per barrel, but not move high enough to increase the appetite for large-scale investments.

"This by no means indicates that low oil prices will go on for a long run," he wrote in the Italian daily. "I previously said that oil prices recovery is inevitable as reduction in investments lead to the lack of supply, which cannot be compensated quickly."

Writing in August, Olivier Jakob, the managing director at Swiss oil-market research group Petromatrix, said the current price point for crude oil was not supportive of extraordinary multilateral action from OPEC. He said a trigger point for coordinated action was more likely at $35 per barrel than at $55 per barrel.

RELATED OPEC data show a cut is necessary to meet Algerian proposal

The price for Brent crude oil was around $51 per barrel early Friday.

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