Business in the Current Oil Market in Russia

Report on the current market scenario of the global oil market along with Russia’s recent business deals and projects in the oil and gas sector.

Mumbai/India - The current global oil market is in a better state than it was in 2014. The last two-three years witnessed a surplus in the market and the production exceeded consumption due to which oil prices more than halved, according to an International Monetary Fund report. This sent out danger signals for the global oil market and in December 2016, Opec (Organization of the Petroleum Exporting Countries) and non-opec countries such as Russia, Azerbaijan, Bahrain, Bolivia, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan signed a historic agreement to undertake joint actions to reduce production.

At an energy event in Russia, Mohammed Sanusi Barkindo, Secretary General of Opec said, “From January to date, we have seen a stock drawdown of nearly 170 million barrels. So there is massive de-stocking that is taking place across the spectrum, across regions, both onshore and offshore.” Recently, Opec mentioned that the market is improving and re-balancing.

At the same event, Vladimir Putin, President of Russia opined, “Not only have we achieved stabilization on the oil market, but we now see new opportunities opening before us, opportunities for the implementation of promising projects and for technological cooperation, because investment has flown back into this sector of the world economy.”

As the global oil market is improving, all eyes are keen to know if the agreement to reduce production will be extended beyond its deadline of March 2018. “Whether we will extend these agreements or not will depend on the situation in the world market. In principle, I do not rule it out, but we will proceed from the realities that take shape by March 2018,” added Putin.

Russia – Saudi Business Ties

Russia and Saudi Arabia are two of the leading crude oil producers in the world and they seem to build their business relations with each other post the December agreement. It was no surprise then that the King of Saudi Arabia, Salman bin Abdulaziz Al Saud recently visited Russia on a four day official trip wherein over 15 co-operation agreements were closed including oil, military, and space exploration.