FILE PHOTO: The Russian Minister of Finance Anton Siluanov attends a meeting during the Week of the Russian Economy in Moscow organized by the Russian Union of Industrialists and Entrepreneurs (RSPP) on March 1
MOSCOW (Reuters) – Russia and OPEC may decide to boost production to compete for market share with the United States. However, this would push oil prices down to $ 40 a barrel, news agency TASS, Russian Finance Minister Anton Siluanov said Saturday.
"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 deal is abandoned) oil prices will fall, then new investments will shrink, American production will be lower because the production costs of shale oil are higher than for traditional production."
Siluanov Oil prices could go down to $ 40 per barrel or even below for up to a year.
The minister said that no decision had yet been made on the deal and that he did not know whether the OPEC countries would be satisfied with this scenario.
OPEC, Russia and other manufacturers, an alliance known as OPEC +, have cut production by 1.2 million barrels per day since 1 January. They meet on 25 and 26 June to decide whether to extend the pact.
The combined supply cuts have helped push crude oil prices up 32 percent this year to nearly $ 72 a barrel. This prompted US President Donald Trump to call on OPEC to ease the market's efforts. OPEC said the curbs need to stay, but there are signs that the stance is waning now.
Earlier this week, sources familiar with the matter told Reuters that OPEC could increase oil production from July onwards, as supply from Venezuela and Iran continues to fall and prices continue to rise as production cuts with Russia and the US expand could overtax the market to other allies.
Reporting by Maxim Rodionov. Editing by Jane Merriman