Published: Thu, June 13, 2019
Finance | By Loren Pratt

Russian Federation warns of 'great risk' of oil overproduction

Russian Federation warns of 'great risk' of oil overproduction

The US Energy Information Administration (EIA) cut its forecasts for 2019 world oil demand growth and US crude oil production in a monthly report released on Tuesday.

While Saudi Arabia has wanted for some time to extend production curbs, Russian Federation has been less resolute, saying its better placed to withstand lower prices than its Gulf ally.

While Saudi Arabia has wanted for some time to prolong the cuts, Russian Federation has been less resolute, saying it's better placed to withstand lower prices than its Gulf ally.

President Vladimir Putin said last week that Russian Federation and the Organization of the Petroleum Exporting Countries disagreed over what constituted a fair price for oil, but that they would take a joint decision at the policy meeting. "We are working to take preventative steps to avoid the scenario that was discussed", Falih said regarding the prospects of prices falling to $30 a barrel, in translated comments. The market is still looking to hear a clear cut answer on a production cut.

Brent crude rose above $63 on Friday after Al-Falih and Novak suggested they would continue to manage the market, though they made no specific commitments on volumes. And the joint OPEC+ meeting is scheduled in early July.


China's crude oil imports slipped to around 40.23 million tonnes in May, from an all-time high of 43.73 million tonnes in April, customs data showed, due to a drop in Iranian imports caused by us sanctions and refinery maintenance.

"Over the past week or so our economists have revised down their GDP growth outlook for the U.S., China, India and Brazil", Barclays bank said on Monday in a note about the economy and its impact on oil demand. Much will depend on the situation on the oil market in the second half of this year in the third quarter on trade wars, as well as on sanctions, Novak said.

Still, the price of Brent is down nearly 20% from its 2019 peak above $75 a barrel in April, pressured by an economic downturn that has started to impact oil demand. President Vladimir Putin has shown he's reluctant to walk away from the agreement, which also ensures his political partnership with Saudi Arabia as economic ties tighten.

Falih told TASS in an interview Saudi Aramco was also studying Russian energy giants Rosneft and Gazprom's LNG projects and that Saudi Arabia might be interested in investing in Russian petrochemical company Sibur.

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