Russia warns of new oil price war due to U.S. shale gains
Russia is said to be planning to boost oil production this year after the expiry of the Organization of the Petroleum Exporting Countries (OPEC) output reduction agreement.
In a written response to Reuters, Rosneft stated, "It became evident that U.S. shale oil output has become and will remain a new global oil price regulator for the foreseeable future.
"There are significant risks the (OPEC-led) deal won't be extended partially because of the main participants, but also because of the output dynamics in the United States, which will not want to join any deals in the foreseeable future."
Rosneft went on to speculate that "We think that in the long-term global oil demand dynamics and reduced investment during the period of ultra low prices will balance the market, but that the risk of a price war resuming remains."
Rosneft noted the only guaranteed way to balance the market is for all producers to limit supplies - even though Russia itself has yet to make good on its pledged cuts.
With the Americans increasingly being viewed as the sole heavies of an initiative that despite reports of 98 percent compliance has seen substantial output increases from the likes of Iran and Iraq, Kuwait has become the first OPEC nation to officially call for an extended reduction agreement. ■