EMEA News
Expect $70 Oil as Russia, OPEC Set to Maintain Crude Output Levels
If statements and predictions from Russia and Nigeria are anything to put stock in, then forget skyrocketing crude prices and expect $70 oil instead, as the market continues to be well supplied due to a number of factors.
Alexander Novak, energy minister for Russia, said there was no reason for his country to freeze or cut its production levels, and he noted that global oil markets could be facing a deficit - a statement that caused some traders to worry about market tightening but could easily be interpreted as a vow to avoid a tightening.
This came on the heels of the Organization of the Petroleum Exporting Countries (OPEC), signaling last week that it may have to reimpose output cuts as global inventories rise.
Meanwhile, on Monday Emmanuel Ibe Kachikwu, petroleum minister for Nigeria, told media that OPEC and its allies are likely to keep oil production policy steady when they meet in December: “I’d be surprised to see anything dramatic; we’re likely to push the can forward” as “$70 is the comfort level, for us and for everybody.”
Kachikwu added that new supply from around the world (including his own country) could swell global output by between 1 million and 2 million barrels per day (bpd) in 2019, and this could oblige the OPEC alliance to consider restraining supplies again.
Of course, most of the panic over the prospect of a global crude market tightening is due to the U.S. sanctions against Iran; but the Iranian oil ministry's website, SHANA, reported that the Islamic republic on Sunday began selling crude oil to private companies for export, part of a strategy to counter the sanctions that come into effect on November 4.
SHANA stated that out of 1 million barrels offered on the energy bourse, 280,000 barrels were sold at $74.85 per barrel, and that the Sunday sales were carried out in increments of 35,000 barrels.
While Russia may be adept at promoting its production capabilities to the outside world, it frequently gives mixed messages about its intentions as well as its world view, case in point: earlier this month Novak ruminated publicly about the possible need of further oil output regulation, while at the same time president Vladimir Putin bragged about being able to add another 300,000 bpd on top of a record high output of 11.36 million bpd.
