Energy Min says oil price of $65-75 can prevent new market crisis

MOSCOW, Oct 9 (PRIME) -- The oil price of U.S. $65-75 per barrel could mitigate risks of a new crisis on the global crude market, Russian Energy Minister Alexander Novak said in an interview with Rossiya 24 television channel released on Tuesday.

“We would not like to have an immediate profit at the expense of a further sharp fall of the price. But it can happen when the price is high because it triggers overproduction and implementation of ineffective projects which create glut on the market,” he said.

“This may cause a new economic cycle and a new crisis cycle similar to what happened in 2014. So if the price were at around… $65-75 (per barrel) there would be fewer risks.”

Novak is sure that joint actions of OPEC+ states helped overcome the previous market crisis faster so the mechanisms to influence cyclic global development are there and may be effective to prevent a new crisis.

In November 2016, OPEC and non-OPEC states agreed to reduce their oil production to rebalance the market. Russia joined the agreement to cut the output by 300,000 barrels daily as compared with the level of October 2016. In 2017, the deal was prolonged until the end of 2018. In June, the participants decided to raise the output by 1 million barrels of oil per day.

Novak also said that Russia does not plan to join OPEC, but may become the organization’s associate member.

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