Baku, Azerbaijan, June 1
By Elena Kosolapova– Trend:
Risks remain that oil prices could again fall below $40, with an equilibrium price seen between $40 and $50 over the next five to seven years, Deputy Finance Minister Vladimir Kolychev told Bloomberg in an interview.
He noted that oil prices can fall in spite of the extension of oil output cut deal.
“The deal between producers over temporary output curbs will help eliminate excess stockpiles,” he said. “But it’s hard to say if the market will rebalance from the point of view of demand and supply at the moment the accord expires.”
In late 2016, OPEC and non-OPEC producers reached a deal to curtail oil output jointly and ease a global glut after more than two years of low prices.
OPEC has agreed to slash the output by 1.2 million barrels per day from Jan. 1, with top exporter Saudi Arabia cutting as much as 486,000 barrels per day. Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce the output by 558,000 barrels per day. The agreement was for six months period, extendable for another six months.
Last week, all the participants of last year's agreement agreed to extend it to another nine months.
The price for August futures of Brent crude oil has increased by 1.3 percent to $51.4 per barrel as of 4:49 a.m. EDT (GMT -4), June 1.