In its short-term market report for July, the U.S. Energy Information Administration said U.S. crude oil production should fall through early 2016.
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The US expert said that el-Badri does not address the principal problem causing low oil prices, namely over-production.
But Badri, indicating confidence in the outlook, was quoted by Russia’s Interfax news agency as saying the market could accommodate extra oil from Iran as demand increased – echoing the view of Gulf OPEC members.
Speaking in Moscow after meeting Russia’s energy minister on Thursday, he said that the cartel was not ready to cut production, which is now at around 30 million barrels per day.
The Organization of the Petroleum Exporting Countries (OPEC) elected in November 2014 to maintain oil production levels, accelerating the price decline.
Russia’s economy has acutely felt the tribulations of the global energy market, slumping into recession over low oil prices and Western sanctions tied to the Ukraine crisis.
Could the Strong Dollar and Rig Count Extend Oil’s Bear Market? “While the prices…no doubt will rebound, it is still too early to say when this will happen”, Badri said.
Result: analysts generally believe the surplus of supply over demand between 1 and 1.5 million bpd, which weighs on prices. Moscow has never fully cooperated and refused to do so as recently as June.
He said this makes some sense because Saudi Arabia is spending its capital reserve accounts quickly and Russia’s economic contraction is serious, and both problems are largely because of low oil prices.
US crude inventories have been bolstered by the fastest pace of production in more than three decades.
“Russian majors’ upstream cash flow break-evens are among the lowest in the world at less than $60 per barrel”.
“We satisfied in December one year ago and most people saw in June for 2013”.
“Despite continuing uncertainties, there are possible signs of achieving a more balanced situation in the oil market and to stabilize it by 2016, which is a mandatory requirement for the continuity of timely and sufficient investments,” said a joint statement released after the meeting.
On Thursday, Badri said he expected oil prices to stabilise next year and to remain so over the long term.
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Oil headed for its biggest monthly drop this year amid speculation a global supply glut that drove prices into a bear market will persist.
