OPEC didn't want to make the first step
British radio station Share Radio had a Q&A with oil
markets expert, Trend Agency’s deputy director, Vagif Sharifov,
about the situation in the oil market and its impact on the Russian
economy.
How are the oil markets doing this morning?
The price of OPEC basket stood this morning at $55 per barrel. WTI
for the January futures is $56 and Brent futures for the February
is $60. If we compare the spot price for "Brent dated" in December
with that of November we can see that figures have fallen by 20
percent. But comparing this month with December 2013, we see the
oil price has fallen by a double. The OPEC position is still as the
same as it was in November.
They are not going to reduce oil production to support prices and
Saudis say there is no politics involved in the issue. Their oil
minister said this week that OPEC could not cut output without the
support of other big producers and attempts to get them on board
hasn't worked. So it actually means OPEC didn’t want to cut the
production on its own and didn’t want to be, you know, the pioneer
in making the first step.
What impact, in your opinion, President Vladimir Putin's
speech had?
Despite the fact that Russia keeps some 15 percent of world oil
production, the world is now producing more oil than consumers
need. OPEC alone produces at least 30 million barrels of oil per
day. Usually the oil market has strong immediate reaction if some
big oil producing country says it is going to cut or increase
supplies. But now what we have heard is only the reaction of Russia
itself to the declining oil market.
Oil companies in Russia – any chance for them to come out
of the situation?
The oil prices began to fall in the autumn of this year, when the
demand actually is always starting to grow (in the middle of
September as usual). The OPEC’s position in that case is very
strange – to keep oil production on a high level despite the
falling oil prices on a daily basis.
There is a chance for Russia’s big oil companies. It is now called
"to be flexible". What it actually means is to cut the staff by
some 15-20 percent and therefore to try to cut the costs. For
example, Russia’s gas giant Gazprom official told reporters that it
would be wrong to exclude the possibility of optimizing the
organizational structure in the future.