HomeMediaLatest NewsSaudi Arabia and Russia are reducing oil production. Prices have risen up

Saudi Arabia and Russia are reducing oil production. Prices have risen up

05 September 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance commented, commented on the reasons and likely consequences of an additional reduction in oil production by Russia to Business FM:

"In this case, the government is quite frank about the reduction goal, and this is an attempt to change the dynamics of world oil prices, to maintain them at $ 90 per barrel or higher. Prices fluctuate all the time. If we start from fundamental factors, then prices could go down again, as it already was in the first half of the year. The fact that prices have been held at the level of 85-90 dollars in recent weeks is a consequence of the purposeful policy of Saudi Arabia and Russia to reduce production. And if there were no such measures, then there are no serious reasons for prices to be kept at such a fairly high level now. Rather, the $70-80 corridor would be more comfortable from the point of view of fundamental factors. At the same time, Russia has an additional incentive to do this, because, as you know, Urals is now being sold at a discount, and, accordingly, in addition to the fact that Russia is interested in higher prices for brands and varieties, an increase in prices for them leads not only to an increase in prices for Urals, but even to reduce the discount. This effect is also observed. Therefore, from the point of view of filling the Russian budget, this issue is really relevant, and the measures look quite reasonable. Therefore, the Ministry of Finance in such conditions can count on additional income."

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