LWill the European Union’s decision backfire? Russian Deputy Prime Minister for Energy, Alexander Novak, warned on Thursday that the Europeans will be the first to “suffer” from the oil embargo decided as part of European sanctions against Russia for its intervention in Ukraine.
“European consumers will be the first to suffer from this decision. Not only the prices of oil but also those of petroleum products will increase. I do not exclude that there is a large deficit of petroleum products in the EU,” said Alexander Novak in an interview broadcast on Russian television.
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The European Union announced on Monday an embargo on 90% of Russian oil by the end of the year, an announcement that increased fears of a shortage. Alexandre Novak swept away the danger posed by this measure for Russia: “It is a decision deferred in time, it is for six to eight months, and during this time the market must reorganize. After months of waiting despite the surge in prices caused by the conflict in Ukraine, members of OPEC and its allies decided on Thursday to move up a gear and boost their oil production, thus responding to calls pressing Westerners.
Alexander Novak, first as energy minister and then in the senior rank of Russian deputy energy prime minister, has represented Russia to OPEC for years. Within the informal alliance dubbed “OPEC+”, Russia and OPEC had succeeded at the end of 2016 in jointly limiting their supply, which in total represents half of the planet’s production, allowing them to regain control of a oil market in disarray. This had kick-started regular, albeit stormy encounters in the following years.
“In my opinion and in the opinion of the participants in today’s ministerial meeting, the market is quite balanced. We see that this year the total increase in demand will be around 3.5 to 4 million barrels per day, ”said Alexander Novak following an OPEC + meeting, which Russia did not have. was dismissed on Thursday. He said this OPEC+ move was made to support growing demand.
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“We see that the demand increases in the summer, the activity of oil refineries will increase, the consumption of petroleum products increases due to more active road travel, increased air transport”, he underlined. “Thus, the decision [de l’Opep + ] will balance the markets and ensure the balance between supply and demand,” he concluded.
He also anticipated a pick-up in demand in China, where coronavirus containment measures are still in effect, stressing “the importance for us to continue constant interaction” and “to monitor the situation on a monthly basis”.