Oil prices are likely to go higher as producing countries have been “successfully” implementing a production reduction deal, Russian Energy Minister Alexander Novak said Sunday.
“Oil prices still have potential to increase. In my view, the price will reach about 50 to 60 U.S. dollars this year,” Novak told Rossiya 24 TV channel.
His anticipation came after the Organization of Petroleum Exporting Countries (OPEC) agreed to cut oil production by 1.2 million barrels per day starting January 2017 and 11 non-OPEC countries vowed to cut oil output by 558,000 barrels per day.
The production slash agreement between OPEC and non-OPEC countries is respected by all the participating parties, said Novak, adding that their total production cut may be higher than 1.7 million barrels per day in January.
Russia, a non-OPEC member, has been reducing its oil production by about 100,000 barrels per day this month under the deal, according to the minister.
Novak called it a “success” that OPEC and non-OPEC countries have stabilized the global oil market.
The market can be rebalanced by this July, rather than the second half of the year as was previously expected, said Novak.
Russia’s government revenues rely heavily on oil and gas sales, and the persistently weak energy prices have dealt a big blow to the country. Enditem