Novak Warns of Oil Market Uncertainty, Fragility

Global oil markets remain fragile due to geopolitics and production declines in several regions, Russia’s energy minister said on Wednesday, but added that his country could raise output if needed.

The comments come amid oil prices approaching $80 per barrel, up from little over $60 in February, amid supply disruptions and expected US sanctions against Iran, Reuters reported.

“Today, the situation is quite fragile, of course, and it is related to the fact that not all the countries have managed to restore their market and production,” Russian Energy Minister Alexander Novak said at an economic conference in the Russian far eastern city of Vladivostok.

“We observe such situation in Mexico, where the decline more than halved from the forecasts on 2018. In Venezuela, production is falling quite strongly, by 50,000 barrels per day. This means that the market is still not balanced in long-term perspective.”

Venezuelan oil exports have halved over the past year to little more than 1 million barrels per day, as the South American country grapples with a political and economic crises.

Novak also warned of the impact on markets of looming US sanctions against Iran’s oil exports, which will be implemented from November.

“This is huge uncertainty on the market–how the countries, which buy almost 2 million barrels per day of Iranian oil will act. Those are Europe, Asia Pacific region ... There is a lot of uncertainty. The situation should be closely watched; the right decisions should be taken.”

Washington has put pressure on other countries to also stop importing Iranian oil. Despite some opposition from governments in Europe and Asia, many oil firms have already started dialing back purchases in anticipation of US sanctions.