GORKY, Russia (Reuters) – Russian Energy Minister Alexander Novak said on Tuesday that current high oil prices of between $70 and $80 per barrel were temporary and were mainly driven by sanctions, adding that the long-term price would stand at around $50 per barrel.
Speaking at a meeting of government officials and the heads of domestic oil majors, convened to discuss ways of propping up domestic oil production, he said the $50 per barrel forecast was based on estimates by analysts and oil companies.
“The current situation, related to the price rise to $70-$80 (per barrel), is mainly… connected to the premium in the price linked to the possible risks of sanctions and lower supply,” Novak said.
He didn’t specify which sanctions he was referring to but oil traders are concerned about the potential impact of U.S. sanctions on Iran and the effect on the availability of crude at the end of the year.
Novak said last week that global oil markets remained “fragile” due to geopolitics and production declines in several regions and that Russia was ready to crank up oil output.
Novak also said he expected Russia’s oil production in 2018 to total 553 million tonnes (11.105 million barrels per day), up from around 547 million tonnes in 2017, and that production would peak at 570 million tonnes in 2021.
On Tuesday, he outlined several measures aimed at encouraging a boost in oil production, which is declining in West Siberia, the country’s main oil producing region.
The measures include introducing benefits for exploration, greenfields developing, increasing production rates, as well as profit-based tax for all oilfields in West Siberia.
The proposals are yet to be approved by the government and the parliament.
Writing by Vladimir Soldatkin and Tom Balmforth; editing by Jason Neely and Emelia Sithole-Matarise