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News // Economy

Volatile world means volatile oil prices, Russia's energy minister says

17 July 2018 , 12:10Daniel J. GraeberNeftegaz.RU536

Moscow, July 17 - Neftegaz.RU. Volatile crude oil prices reflect a volatile geopolitical climate as well as concerns about global trade tensions, Russia's energy minister said July 13.

 

Alexander Novak addressed the price of crude oil ahead of the meeting in Helsinki between Vladimir Putin and Donald Trump. The U.S. president expressed concern about rising crude oil prices in recent weeks, calling on Saudi Arabia to open the spigot to address a looming supply deficit in the 2nd half of the year.

 

Novak was quoted by Tass that a higher price for oil was negative for the global economy. «Crude prices are volatile and respond to existing general signals,» he said. «The current prices reflect trade wars statements as well.»

 

Crude oil prices have waxed and waned in response to a long list of issues, from militancy in Libya, pending U.S. sanctions on Iran and declining confidence in response to simmering global trade tensions.

 

Brent turned lower after a late June meeting of ministers from the OPEC. Member states decided to ease compliance with a multilateral production control effort. Supported in part by chronic production challenges in Venezuela, compliance in May was close to 150 %.

 

Moving compliance to 100 % adds a theoretical 1 million barrels per day to the market in the 2nd half of the year. That's eased concerns about further market deficits triggered by Venezuela and the possible loss of Iranian oil from the market when U.S. sanctions snap back in November.

 

If the market needs another 1 million barrels per day, Novak said members of OPEC, plus non-members state contributors, will «take a required decision». Spare capacity, what producers can add to the market in relatively short order, is at a premium, however.

 

Novak sits on a committee monitoring compliance for OPEC production arrangements. The minister said during the weekend before OPEC's last meeting that Russia could add about 175,000 barrels of oil per day in the 2nd half of the year.

 

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