Russian Energy Minister Alexander Novak said that cooperation with Saudi Arabia would ensure a balance of supply and demand and the stability of the oil market.
In an interview with Asharq Al-Awsat, Novak said he expected that the demand for oil would be threatened over the next few years due to the global economic slowdown, the decline in global trade growth and the escalation of trade disputes between the United States and China.
He pointed out that the month of April witnessed an increase in the implementation of quotas stipulated in the “OPEC+” agreement, mainly because of Saudi Arabia’s keenness to fully execute the deal.
Asked about the recent OPEC meetings in Jeddah, the Russian energy minister said that participants discussed issues pertaining to the need to stabilize the oil market, as well as necessary steps to maintain stability and predictability.
“Our main task was to assess how the production cut agreement was implemented within the past four months and to formulate estimates for the second half of the year. All ministers agreed that the agreement achieves the goals for which it was fully developed, with the level of implementation in April reaching a record level of 168 percent,” he told Asharq Al-Awsat.
Novak emphasized that the areas of cooperation with the Kingdom exceeded the field of energy to cover space exploration, finance, agriculture, and others, noting that the volume of bilateral trade exchange by the end of 2018 increased by 15% and accounted for more than one billion USD.
“Trade and investment cooperation between Russia and Saudi Arabia is constantly expanding and strengthening,” he underlined.
With regards to coordination between Russia and Saudi Arabia on oil policy and price stability, the minister said: “Saudi Arabia plays one of the leading roles in OPEC. The solidarity shown by the Kingdom and Russia in the framework of cooperation between OPEC and non-OPEC members is a crucial factor in ensuring the balance of supply and demand in the oil market and maintaining the desire to invest in this sector in the long term.”
He emphasized, on the other hand, that working according to the OPEC+ formula and the bilateral relations with Saudi Arabia were two parallel paths.
“Regardless of the decisions taken within the framework of OPEC+, we will continue with the Kingdom to develop cooperation in the oil sector, including the implementation of joint ventures and bilateral investments, as well as in other economic sectors,” he explained.
Asked about the upcoming challenges in the oil market, Novak stressed that over the next few years, oil demand risks might arise due to the global economic slowdown.
“Among the economic factors, we can note the beginning of the decline in the rate of growth of world trade and the escalation of trade disputes between the United States and China,” he remarked.
Novak continued: “These factors, together with the increasing political uncertainty in many regions of the world, indicate that the global economy is experiencing further shocks. Lack of predictability and unclear rules of the game have always led to the deterioration and decline in the investment climate.”
He said the main factor affecting markets was the balance of supply and demand. He explained that if the supply exceeded the demand, surpluses would be accumulated.
“Markets are very responsive when there is too much stock and tend to lower the prices,” he said.
“Today we observe a more stable situation in the market, low volatility and reasonable prices that are suited to both exporters and consumers. We believe that thanks to the OPEC+ agreement to reduce production, this stability has been achieved,” he concluded.
