Fitch: Russia has to slash its oil prices to keep European market

MOSCOW, Mar 13 (PRIME) -- Russia will have to reduce its oil prices for Europe by a significant margin not to lose its market share to Saudi Arabia, Dmitry Marinchenko, director for natural resources and commodities group of international rating agency Fitch, told PRIME on Friday.

“Europe accounts for about a half of Russian oil exports, and Russian companies will have to cut prices significantly to keep the market share,” he said.

Lower demand in China because of the coronavirus is also an important factor. “But the major problem is not in direct competition, it is the inability of Saudi Arabia and Russia to agree on a production cut during a market glut and falling demand, which will push prices down,” he said.

Russia and Saudi Arabia failed to agree on prolongation of the OPEC+ oil output reduction deal after April 1 as Riyadh demanded a deeper cut of output from Russia, while Moscow wanted to wait for a bit and assess the real impact of the coronavirus on the global economy. Reuters reported that Saudi Arabia wanted to squeeze Russia out of its major markets by offering its oil at lower prices.

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