MOSCOW (Reuters) – Russia’s Energy Minister considers the oil price of between $55-70 a barrel as ‘optimal’ for the market, according to an interview published on Tuesday.
Oil hit its highest since 2014 on Tuesday as tensions between Russia and Ukraine escalated after Moscow ordered troops into two breakaway regions in eastern Ukraine, adding to supply concerns that are pushing prices to near $100 a barrel.
“Oil prices affect other prices, which means that because of high oil prices we will see prices growing in other sectors of the economy as well. Also, high prices result in a slower growth in demand,” Nikolai Shulginov told Energy Intelligence.
He added that Russia was increasing its oil production within the agreed volumes as part of the OPEC+ deal.
Russia has capacity to increase oil production further, including through new projects such as Vostok Oil, the minister was quoted as saying.
“We think about an increase in production and exploration. Our 2035 program for the development of the oil industry stipulates the growth and subsequent stabilization of production,” said Shulginov.
Russia has been restoring its oil output in tandem with the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, amid a recovery in demand, which had been dented by the pandemic.
Russian output of oil and gas condensate C-RU-OUT rose in January to 11 million barrels per day (bpd), a level unseen since April 2020.
Russia will by March have restored 1.8 million barrels per day of the 2 million bpd of oil production it agreed to cut in April 2020, Russian Deputy Prime Minister Alexander Novak said in early February after the OPEC+ agreed to stick to moderate rises in output.
Russian oil production rose by 2.2% to 524.05 million tonnes last year.
(Reporting by Olesya Astakhova; Writing by Anastasia Lyrchikova; Editing by Maria Kiselyova)
