$100 barrel oil? Gazprom predicts Russia’s rebound


December 21, 2015

Rossijskaya Gazeta

Translated from Russian by Kristina Rus for Fort Russ

By Alena Uzbekova

Global oil prices could sink below the current level of 36 dollars per barrel, but it will not last long, says general director of “Gazprom Oil,” Alexander Dyukov.

“No matter what, in the medium or long term the rates will begin to return to the level that is just and right for consumers and producers. I’m talking about the price of 90-100 dollars per barrel”, – he declared in an interview with TV channel “Russia 24”.

According to Dyukov, currently there is “shorting game”. One of the reasons is the expectation of a rate increase by the Fed. For now the price has stabilized.

“Theoretically, if the shorting game will continue, the price may get lower but it is obvious that this decline will be short-term,” – said Alexander Dyukov.

However, reaching the level of $90-100 per barrel may take a few years. The head of “Gazprom Oil” called the current situation not the most favorable.

“It will have long term implications not just for oil companies but for the consumers,” – he said. Dyukov also believes that Russia should not change the strategy on the global oil market in an attempt to maintain global oil prices.

“We don’t feel the weakest in this game, we have a serious margin of safety. I don’t see any point for us to change the strategy that was chosen by the Russian Federation. If we talk about this competition – we won’t lose it for sure. It’s a game of nerves, who’ll blink first, but Russia is absolutely prepared for this game. In production costs we are not far behind the Middle East, maybe even better off in some ways,” – he said.

The lost balance of supply and demand in the oil market could be restored by OPEC and Saudi Arabia.

“But Saudi Arabia is currently fighting for the market share, in addition to increasing its share it is trying to take over expensive projects from many investors. If you removed  1.5 to 2 million barrels of oil from the market, it would bring oil prices to 65 dollars per barrel, guaranteed”, – said Dyukov. 

The extraction of unconventional hydrocarbons in North America is likely to decline, which will balance supply and demand in the medium term. This will lead to higher prices. The lifting of the embargo on oil exports from the United States, according to Dyukov, will not have a significant impact on the global market.

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