Russia’s oil bosses brush off price drop

Bloomberg

Russian officials and executives from its biggest oil companies put on a brave face, even as Brent trades near 16-month lows. “The drop in oil prices hardly bother us because our budget is based on $42 a barrel,” First Deputy Prime Minister Anton Siluanov told reporters ahead of a meeting between President Vladimir Putin and big business in Moscow.
“The price can stay around $40-$50 for a time — six months or a year,” because US producers have hedged some of their production, Siluanov said. “We think this won’t last long.” Even if it does, Russia has ample financial reserves, he said.
Brent traded at $50.47, near the lowest since August 2017, amid worries of a new supply glut and a slowdown of global economic growth. The Organization of Petroleum Exporting Countries and its allies including Russia agreed in 2018 to cut production in the first half of 2019.
The price “should have stabilised, because everyone was supposed to be scared” by the Opec+ deal, said Igor Sechin, chief executive at Rosneft PJSC, Russia’s biggest crude producer. “But nobody was scared.” He blamed rising US interest rates for forcing speculators to sell their positions and drive prices lower. Rosneft’s “conservative” scenario put oil at $50-$53 a barrel in 2019. Vagit Alekperov, president for the second-largest oil producer Lukoil PJSC, forecasts crude will be stable at $60 or slightly more in 2019 thanks
to the Opec+ pact.
The comments followed statements by Kremlin spokesman Dmitry Peskov that it’s too early to assess the Opec+ deal’s effectiveness and the pact will have an impact on prices over time.