EMEA News
Russia Takes A Swipe At OPEC Freeze Deal By Maintaining Price Forecast At $40
Russia, whose economic future is said to revolve around crude prices at the $40 level, is maintaining its outlook that this price level will be the average in the next three years – despite oil climbing to near $50 in the wake of this week's Organization of the Petroleum Exporting Countries' deal to cut production.
Anton Siluanov, finance minister for Russia, told reporters in Sochi, "we know prices are adjusted after such statements," adding that his country's main export blend Urals used to calculate the national budget "was and remains" at $40 per barrel.
He also took a thinly veiled swipe at Wednesday's proceedings by saying of the market, "You think it's stabilized? We need to see how realistically the decisions will be implemented."
Siluanov also disclosed a strategy to be enacted if oil rises above the $40 mark: "We'll spend less from reserves - that's our approach.
"On the other hand, output limits aren't the only factor that affects the price of oil: there's also the issue of global demand, how the world economy will develop - that will also affect pricing."
The energy minister echoed sentiments expressed by the analytical community that the OPEC deal could compel U.S. shale producers to return rigs to production: "That's also a large supply volume, because shale projects very quickly get turned around; which is why we can see additional supply on the oil market."
Russia is currently on track to pump oil at a post-Soviet record in September, adding as much as 400,000 barrels per day to the country’s output; and prior to Algeria, Siluanov told media that Russia was "not engaging in any limits or reduction in oil production."
However, all this news has not damped the outlook of RBC commodities analyst Helima Croft, who believes a critical indication from Algeria is that Saudi Arabia is willing to shoulder most of the production cuts in order make the OPEC deal stick and support prices.
"It can continue to be choppy based on weekly stats, rig count numbers, and broader macro trends," she told CNBC.
"But we think we are done with sub-$40, barring a major macro meltdown panic, and firms the case for 50's by year end and trending into the 60's next year."
