Russia’s Gazprom Neft Sees Oil Prices Topping $30 This Summer

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Oil prices will top $30 a barrel this summer as demand will start to recover slowly, Alexander Dyukov, chief executive at Russian oil producer Gazprom Neft, told a Russian television channel in an interview on Friday.

Dyukov, head of Gazprom’s oil arm, said that he hoped oil prices would exceed $30 a barrel in the summer and approach $40 per barrel by the end of this year.

The manager, however, noted that demand recovery would not be V-shaped, and there would not be a jump in prices in May, although this is the month in which the new OPEC+ cuts enter into force.

Last month, Dyukov told Russian business daily Kommersant that if US states ease lockdowns and oil demand improves, oil prices could recover to $40-$45 a barrel by the end of this year.

As part of the OPEC+ deal, Russia pledged to cut its production to 8.5 million bpd in May and June from a February 2020 baseline, or by around 2 million bpd, or by 19 percent, from February 2020, Russian Energy Minister Alexander Novak told Interfax in an interview earlier this week. Assuming full compliance, Russia could see its oil production decline by 15 percent annually in 2020, according to Novak. As per Reuters estimates, a drop in 2020 production would be the first decline in Russia’s oil output since 2008.

According to Gazprom Neft’s Dyukov, Russian companies cutting so much production as per the OPEC+ deal would not be an easy task, but it is achievable.

Russia has rarely complied 100 percent with the previous OPEC+ pacts over the past three and a half years.

Even though the OPEC+ deal begins on May 1, oil prices will not rise much in the near future because of very high global inventories, minister Novak said in an article published in the ministry’s publication Energy Policy this week.

China is already showing signs of recovering economic activity, and we hope that other economies could see positive developments in a few months, too, Novak said, but warned:

“Nevertheless, you should not expect a jump in oil prices in the near term, due to the current oversupply on the market.”


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