Russia is not to blame for a global glut in oil that has caused prices to slump over the last 16 months, and the country’s energy minister pointed the finger at U.S. shale oil producers and the Organization of Petroleum-Exporting Countries (OPEC).
A glut in the supply of oil and lack of demand has caused global oil prices to fall from a high of $114 a barrel in June 2014 to currently trade around $50. Despite the fall in prices, the 12-member oil producer group OPEC has not reduced output (and has even increased production),
in a move seen as part of a strategy to defend its market share in the face of competition from U.S. shale oil producers.
Russia, which is not a member of OPEC, has also not reduced oil production in a bid to support prices, but Russia’s Energy Minister Alexander Novak was clear that his country was not to blame for the supply glut.
“The gas and oil industry is one of the most important industries in Russia…(But) with respect to Russia’s export influence on global markets in the past years, we have maintained our output rate pretty much unchanged over the past three to four years, but we have witnessed a lot of inflow, of a lot shale oil from the United States,” Novak told CNBC Tuesday.
“The U.S. alone has been responsible for an additional five million barrels a day, which is a large amount and the market hasn’t been able to process this huge quantity of oil.”
“In my view, therefore, there are two factors that influenced overproduction: very high rates of growth in shale oil extraction and an increase in production by OPEC countries that over the past year have increased production by 1 million barrels a day – that’s a huge number for a market that normally grows, on average, by 1 million barrels a day per annum.”