Russia and OPEC risk abandoning oil deal to gain market share, Russian minister says

PHOTO FILE: Russian Finance Minister Anton Siluanov attends a session organized by the Russian Union of Industrialists and Entrepreneurs (RSPP) in Moscow on 14 March 2019. REUTERS / Maxim Shemetov

MOSCOW (Reuters) – Russia and OPEC may decide to increase production to fight for market share with the United States, but it would lower oil prices to $ 40 per barrel , announced Saturday the TASS news agency, Anton Siluanov.

"There is a dilemma. What should we do with OPEC: should we lose the market occupied by the Americans or give up the deal? Anton Siluanov said in Washington, TASS said.

"(If the agreement is abandoned), oil prices will fall, then new investment will decline, US production will be lower, because the cost of production of shale oil is higher than that of traditional production."

Siluanov said oil prices could drop to $ 40 a barrel or less for a year.

The minister said that the agreement had not yet been decided and that he did not know if the OPEC countries would be satisfied with this scenario.

The OPEC, Russia and other producers, an alliance known as OPEC +, are cutting their production by 1.2 million bpd as of January 1 for six months. They meet on 25 and 26 June to decide to extend the pact.

The combined supply cuts brought crude prices down to 32% this year, to nearly $ 72 a barrel, prompting US President Donald Trump to call on OPEC to relax its efforts to support the market. OPEC said the restrictions should remain, but some signs indicate that the attitude is softening.

Earlier this week, sources close to the case told Reuters that OPEC could increase its oil production from July if Venezuelan and Iranian bids fell further and prices continued to rise as extension of production cuts with Russia and other allies could strengthen the market.

Report by Maxim Rodionov. Edited by Jane Merriman

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