At the present time the excess of oil over demand due to low prices. The market recovery will require at least another year and a half, said energy Minister Alexander Novak.
KHABAROVSK, 17 Jan. The oil market begin to balance after 1-1. 5 years, a fair price is at the level of 40-50 dollars per barrel, said the Minister of energy Alexander Novak in the program “Vesti Nedeli” with Dmitry Kiselev.
According to him, now there is excess supply of oil over demand. The demand grew by 1.5 million barrels a day offer — up to 1.9 million barrels per day due to low prices.
“Now we are seeing a decline in heavy oil production, tight oil, shale oil, and we believe that the restoration (of the balance of supply and demand in the oil market — ed.) will require at least one year, a year and a half. The balance of supply and demand will start to level off,” said Novak.
“As for prices, it is difficult to predict when they will recover. If we talk about fair prices, in my opinion, and it is spoken by many analysts, today, the benchmark, the closing price is the cost of shale oil production Cost ranges from 20 to 60 dollars. On average we can say about 40-50 dollars as the price, which in the case of recovery could keep the balance of supply and demand”, — said the Minister.
In his opinion, the situation with low oil prices gives Russia a chance to diversify the economy, reduce dependence on hydrocarbons, to introduce innovation in industry, export agriculture and engineering. Furthermore, at low prices of the company’s budget and get rid of inefficient expenses.