Vladimir Putin held a meeting, via videoconference, on the situation in global energy markets. The participants discussed measures to ensure sustainability and development of the national fuel and energy industry, presidential web page reports.
As Putin noted, “The situation in global energy markets remains complicated. The coronavirus epidemic has affected the entire global economy, thereby reducing consumer demand for energy, especially in transport, industry and other sectors. This situation is negatively affecting the financial and economic sustainability of the oil industry all over the world. Moreover, it is undermining investment programs and may also affect employment. All this will trigger high technological and even environmental risks.”
He also believes, “The global oil industry could be short of oil in the future when demand picks up. So oil prices could shoot up.” To prevent that, it is necessary “to balance the market and reduce production as a result of concerted and well-coordinated efforts. Based on tentative estimates, the reduction should be about 10 mio barrels per day.”
According to Minister of Energy Alexander Novak, “The drop in demand may reach 15–20 mio barrels per day in the next few weeks. This is approximately 20% of the world’s total production. Due to overproduction or lower demand, oil is now being moved to either surface storage or oil tankers. According to estimates, oil can be moved to storage for another month and a half or two months, for record-high reserves. When total over-storage occurs, the industry can encounter unpredictable consequences, including even more significant price drops.”