The global oil market could return to a balance between supply and demand by the end of next year, as long as producers do not raise output from current levels, Russian Energy Minister Alexander Novak said on Wednesday.
Global oil prices have fallen below $40 per barrel for the first time since late 2008 after OPEC failed to agree on a production ceiling earlier this month, Reuters reported.
Russia is rivaling Saudi Arabia as the world's top oil producer and has consistently refused to cut production or cooperate with OPEC, effectively adding to the global oversupply by pumping crude at post-Soviet era highs. "First of all, our policy calls for maintaining production at 525-530 million tons a year, according to our energy strategy," Novak told Rossiya-1 TV station, giving output figures equivalent to 10.5-10.6 million barrels per day. In November, Russia pumped oil at a post-Soviet high of 10.78 million bpd and declined to send a delegation to the OPEC meeting on Dec. 4.
"We think that if all countries now working in the market have a policy of not increasing production but maintaining volumes, then demand and supply may already be balanced by the end of 2016," Novak said. Russian officials have said in the past that low oil prices should squeeze out high-cost production such as US shale oil, effectively reducing the level of global oversupply.
The Russian central bank is preparing a risk scenario with oil prices at $35 per barrel for the next three years. Under this scenario, the economy would shrink by 2-3% in 2016.
Some banks, such as Goldman Sachs, predict oil prices could fall as low as $20 per barrel as the world produces more oil than it consumes and runs out of room to store the excess. OPEC Secretary-General Abdullah al-Badri said on Tuesday crude oil prices will not continue at multi-year lows and could swing upwards in as little as a year. Novak, who repeated on Tuesday that Russia cannot manually regulate production due to specific weather conditions, said he saw global oil prices at about $50 per barrel in 2016.
