As coronavirus-inflicted disruption in global oil demand surge, Russia’s Energy Minister, Alexander Novak, said there was a need for all players on the energy market to act together to tackle the effects.
Novak, at a virtual meeting of G20 energy ministers over the weekend, said, “Our task, as the leaders of the energy industry, is to show stamina and solidarity in the face of the challenges like that.”
Novak noted the pandemic had wiped out a tenth of oil demand this year, forcing energy companies to cut spending on production by 25 to 30 per cent.
He added that fuel demand was down by 28 to 30 per cent, mostly on the back of a sharp decline in trucking activity, while expressing pessimism that recovery would be slow in coming.
“It is obvious that the structure of the energy sector will be transformed both from the point of view of demand and from the point of view of supply. Recovery will not be quick and it will take quite a long time to reach the pre-crisis indices,” the Russian minister said.
“Russia has undertaken unprecedented liabilities on market balancing, as a responsible energy market participant. We are doing our best to prevent a collapse on the energy market and, hence, in the global economy,” he added.
On the other hand, Mohamed Barkindo, President of the Organisation of the Petroleum Exporting Countries, had an optimistic message for markets at the same conference.
According to him, the Organisation for Economic Co-operation and Development oil inventories will fall below the five-year average in the second quarter of next year.
In the current quarter, he said OECD stocks would stay well above the five-year average, but then start declining in the final quarter of the year and continue declining over the first three months of 2021 until the excess is eliminated.
Barkindo also argued that stocks would stay below the five-year average for the rest of 2021.
Meanwhile, the price of OPEC basket of 13 crudes stood at $41.93 a barrel to close the week, according to OPEC’s calculations.
