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Russian Energy Ministry Expects Average Oil Price of $35/b in 2020

Russian Energy Ministry Expects Average Oil Price of $35/b in 2020
Russian Energy Ministry Expects Average Oil Price of $35/b in 2020

The Russian energy ministry expects the average oil price to be $35 per barrel in 2020, Minister Alexander Novak said Saturday.
Russia's 2020 budget is based on an oil price of $42 per barrel, officials said previously. Novak said he currently only expects oil services providers, who have been hit hard by Russia's significant oil production cut under the OPEC+ agreement, to require state support, S&P Global Platts reported.
"We have very flexible taxation for oil producers, dependent on the oil price," Novak said. "Our oil companies can continue to produce even when the oil price is low, thanks to reserves and low taxes."
He added that large Russian oil and gas companies will continue investment programs, with some cuts of up to 20%, but no fundamental changes.
Novak noted that he does not expect oil demand to return to pre-crisis levels in the near term.
"Certainly not this year," Novak said. "We hope that it will happen in 2021. But maybe it will take two or three years. Because people will fly less, drive less, travel less and do more online. The economy will grow again, but the demand for oil from transport will remain lower."
Russia does not currently see a need to deepen oil production cuts under the OPEC+ agreement, but the group will continue to discuss the situation monthly, the minister added.

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