Russia is prepared to ramp up oil production to historic highs after a global deal to freeze output levels collapsed and Saudi Arabia threatened to flood markets with more crude.
“They [Saudis] have the ability to raise output significantly. But so do we,” Russian Energy Minister Alexander Novak told journalists on the sidelines of an international energy conference in Moscow.
He said Russia is “in theory” able to raise production to 12 million or even 13 million barrels per day (bpd) from current record levels of close to 11 million bpd, Reuters reports.
Russian oil output has repeatedly surprised on the upside over the past decade, rising from as low as six million bpd at the turn of the millennium.
Oil experts have repeatedly predicted an unavoidable decline amid infighting by members of the Organization of Petroleum Exporting Countries (OPEC).
However, that has yet to happen.
Venezuela said prices could crash in the next few weeks if producers fail to resume dialogue and urged that non-OPEC participants be observers at a June OPEC meeting, as the spectre of oversupply loomed once more.
OPEC member Venezuela and top non-OPEC producer Russia had been the main proponents of the output freeze deal, in the making since February, until it collapsed on Sunday in Doha after Riyadh said it would not sign unless Iran took part.
The deal had been meant to help the market rebalance by removing a large chunk of oversupply and a stockpile glut.
But Saudi Arabia said it could jack up output instead — by as much as two million barrels a day to over 12 million — which would allow it to overtake Russia as the world’s largest producer.
Oil prices crashed to below US$30 per barrel in January from as high as US$115 in mid-2014 after Saudi Arabia decided to raise output to drive higher-cost producers such as the US out of the market.
The kingdom, OPEC’s de facto leader and the world’s top exporter, has been pumping unprecedented volumes above 10 million bpd for a year.
Adding to the glut, Iran said it was determined to raise output to regain market share after the lifting of Western sanctions on the Islamic Republic in January.
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