“We are already seeing, that the foundations of the oil supply and demand nowadays, will start to get a correction, in 2016”, said OPEC secretary general Abdullah al-Badri.
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MOSCOW, Jan 25 Russia needs to start working with OPEC to cut oil supplies to the world market to try to support prices, Leonid Fedun, vice-president of Lukoil, Russia’s second largest oil producer, was quoted as saying on Monday.
According to al-Badri, “it is vital that the market tackles the problem of the surplus fund. Since it is possible to see in previous cycles, once this surplus begins to diminish, then the prices begin to rise”, he insisted. “It should be viewed as something OPEC and non-OPEC tackle together”.
“It is crucial that all major producers sit down to come up with a solution to this”, El-Badri said at the Chatham House think tank, Bloomberg reported. “At current price levels, it is clear that not all of the necessary future investment is viable”, he said.
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Weak oil prices are also hitting Russia’s commodity-dependent budget and the rouble, which touched all-time lows of around 86 per US dollar last week.
OPEC and Russian Federation, the world’s top oil producers, have refused to cooperate to help buoy global oil prices as they were defending their market share from each other and the United States, where shale oil output had taken off over recent years. Between 2013 and 2014, OPEC supply declined by 1 million barrels per day, while non-OPEC output grew by 3.7 million bpd.
Since the beginning of 2016 oil prices have plunged 15 percent. Pumping record volumes “is not the best way to improve economics”, he said.
Originally due to step down in 2012, El-Badri’s term has been extended several times as members fail to agree on successors proposed by Saudi Arabia, Iran and Iraq. Expectations for additional output from Iran following its emergence from sanctions has further depressed prices this year to the lowest since 2003.
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Venezuela has repeatedly called for Opec to meet as slumping prices sap government revenue.
