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Russian Energy Minister Alexander Novak is not concerned about recent falling oil prices due to an increase in inventories from US shale fields. The official stated at a joint news conference with Saudi Arabia that he expects the agreement reached with OPEC to reduce inventories and boost prices will reach its goal in the first quarter of next year.
“His Saudi counterpart, Energy Minister Khalid Al-Falih, said at a joint news briefing in Asatana, Kazakhstan, that inventories were declining worldwide and reductions would accelerate in the next three to four months. Inventories will settle to their five-year historical average — OPEC’s target — before the end of the year, though Saudi Arabia, the group’s biggest producer, may modify its policy if output cuts don’t have the desired effect, he said,” reported Bloomberg.
“If we will see over the number of weeks or months reasons to adjust, we will adjust.” Al-Falih told reporters after the briefing. “If by the fourth quarter we will need to do something different, we will seriously consider.”
Russia and OPEC countries have teamed up to re-exert influence over global oil markets as U.S. shale dramatically reduced prices and pushed Russia into a recession over the last few years. Moscow and Riyadh have repeatedly ‘talked up’ the market with only limited effect. Crude has been locked in a trading range with a ceiling of $60 a barrel for Brent.
Russia still depends greatly on the sale of hydrocarbons to meet its federal budgetary goals. Moscow has been attempting to diversify its economy but the effort has been marginally effective. Saudi Arabia has also experienced financial difficulty due to dependence on oil revenue.