Gulf Countries Responsible for Latest Oil Crisis: Russian Deputy PM

Russia did not want to end cooperation with OPEC and did not seek a sharp drop in oil prices, a senior Russian official told TASS news agency, adding that the Gulf nations are to blame for the crisis on global oil markets.

The Organization of Petroleum Exporting Countries (OPEC) and Russia this month failed to agree how their deal to cut oil output should work. With global oil demand slumping because of the coronavirus, OPEC wanted to deepen supply cuts but Moscow said it would agree only to an extension to the existing pact.

Oil prices fell from nearly $50 a barrel on March 6, when the deal collapsed, to less than $27 on Friday after Russia and Saudi Arabia, the de facto leader of OPEC, said the world’s two biggest oil exporters would open the taps from April 1.

“(The) Russian position was never about triggering an oil prices fall. This is purely our Arab partners’ initiative,” Andrei Belousov, Russian first deputy prime minister, was quoted as saying by TASS late on Saturday. “Even oil companies who are obviously interested to maintain their markets did not have a stance that the (OPEC+) deal should be dissolved.”

Belousov reiterated that Russia was proposing to extend the existing curbs by at least one more quarter and potentially until the end of 2020. “But (our) Arab partners took a different stance,” TASS quoted him as saying.

Russian Energy Minister Alexander Novak has called a meeting with oil companies on March 23 to discuss the state of global oil markets, Interfax reported on Sunday, citing two sources.

Igor Sechin, head of leading Russian oil producer Rosneft, has always opposed the three-year supply pact, saying it allows non-OPEC members such as the United States to increase market share at the expense of those cutting supply.

“Is there a point to cut further if other producers will increase?” Sechin was quoted as saying on Friday in his first public comments since the deal fell apart.

Sechin said he believed that global oil prices could return to $60 a barrel by the end of the year if shale oil – produced in large quantities by the United States – is forced out of the market. Belousov believes that oil prices will balance at about $35-$40 a barrel.

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