When the week began, there were reports about the reasons for Russia abandoning the deal of OPEC and it hasn’t been long before Russia has recently in an interview given an explanation of its reasons. The investors who have been interested seriously in oil space have been interested in the interview. They have been also looking at the implications it is going to have on the other segments of this oil industry. The interview has been given by the deputy energy minister of Russia, Pavel Sorokin. It is important to be kept in mind that such officials do not provide analysis and they only provide the signals to the market. A few key points which emerged were that Russia believed that it wasn’t possible that they can combat a situation when demand is falling constantly and there is no clarity about the bottom.
The initial position of Moscow had been extending the agreement without the cuts additionally for second quarter. Further, the Moscow is not going to exclude possibilities of extending the deal even further. For Russians, the new cuts are going to mean that there will be additional cuts of 300,000 bbl per day bringing the cuts totally to 600,000 bbl in a day which has been challenging technologically
Sorokin had stated that the oil prices which are in the range of $45 to $55 a barrel were fair and are going to allow the investors to invest in the projects and also keep the supply coming.
He also believed that the oil prices are going to increase in the second half of the year and keep increasing further in the year 2021.