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Novak Blames US Trade War for Current Crude Oil Prices

Novak Blames US Trade War for Current Crude Oil PricesNovak Blames US Trade War for Current Crude Oil Prices

The current level of oil prices stems particularly from the US trade war, Russia’s Energy Minister Alexander Novak said on Friday.

“Those oil price declines are negative signals for the global economy. Crude prices are volatile and respond to existing general signals. The current prices reflect trade wars statements as well,” Novak was quoted as saying by TASS.

Member states of the Organization of Petroleum Exporting Countries and non-OPEC countries agreed to ease the output curbs set in place to boost prices that had dipped to abysmal levels. However, when prices hit $80 per barrel, US President Donald Trump begged them to again turn on the oil taps to lower prices.

A sharp drop in crude prices started on July 11, as the price of Brent crude oil decreased by $4 on the day to $73 per barrel.

Novak said Russia restored oil production by 80% in July against the reduction volume within the OPEC+ agreement.

“Following the decision on increasing production, in July we have already restored reduction by approximately 2/3 or even by 80%,” he added.

Russia reduces crude oil production by 100,000 barrels per day in July, versus October 2016.

“In June, the reduction was 180,000 bpd instead of 300,000 bpd. As for July, it is still early to speak about monthly indicators, though we assume that the total reduction will amount to roughly 200,000 versus the limit. Around 100,000 bpd will remain compared with October 2016,” he said.

The Russian minister expects the effect of OPEC+ deal to amount to 2.5 trillion rubles ($40 billion) in 2018.

“With (oil) prices of $70 per barrel, the effect will amount to 2.5 trillion rubles,” he said, adding that with the average annual oil price of $75 per barrel, the effect may exceed 3 trillion rubles ($48 billion).

According to Novak, extra revenues from the deal amounted to 1.7 trillion rubles ($27 billion) in 2016-17 due to the oil price increase.

“OPEC+ will be able to make decisions on regulation of the oil market after 2018. The OPEC+ agreement fulfilled the task of balancing the market,” he said.

“As for continuing this work to regulate after 2018, we will consider its expediency. The mechanism was effective. The countries want to continue interaction, make decisions on oil production, if necessary,” he said. Novak said OPEC+ states may raise crude production by over 1 million barrels per day if needed. This claim has been disputed by experts.

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