Russian Energy Minister Alexander Novak said in an interview this week aired on a Russian television channel Saudi Arabia was to blame for the collapse in crude oil prices, Oil Gas Daily reported.
Brent crude oil prices are down roughly 36% from this time last year and continue to hold beneath $40 per barrel — even pennies below West Texas Intermediate crude — Kallanish Energy calculates.
Oversupply, despite low crude prices, and weak demand are putting downward pressure on markets.
“This year Saudi Arabia has ramped up production by 1.5 million barrels per day (MMBPD), which in fact destabilized the situation on the market,” Novak said.
Data from the Russian Energy Ministry show total oil production for November was 10.8 MMBPD, a slight decline from October, but still above levels from the former Soviet era.
Russian Deputy Prime Minister Arkady Dvorkovich told Russian TV the current low price level for crude oil is “unsustainable.”
“For some time, any company, any producing country is able to sustain such low prices,” Dvorkovich said. “But then investment will inevitably go down, which means production will fall and prices will rise.”
Novak said a between supply and demand may occur during the second half of 2016, but added “New production in Iran [post sanctions] may affect the market.”
Low crude oil prices are hurting exporting economies like Russia’s. From September to October, gross domestic product (GDP) grew by roughly 0.3%, compared with about 0.1% for the previous month. GDP growth of a still anemic 0.7% is expected for Russia in 2016.