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GazProm boss cautious about oil market overheating

The CEO of Gazprom Neft, Russia’s third-largest oil producer, has indicated that there is still a risk that the oil markets may overheat in 2022, although he said his company was working on increasing its spare production capacity, so it could bring more barrels to market if needed.

Alexander Dyukov said he sees a sustainable price for crude oil laying in the $50 to $65 per barrel range. While the price is currently rather stable, he said the relatively high level may incentivise countries not party to the OPEC+ agreement to increase production, which in turn could lead to oversupply and cause oil prices to decrease.

While high oil prices can generate greater profits for big oil and lubricant companies like Shell and Exxon Mobil, a stable, sustainable price enables investment decisions to be made with more predictable returns. Dyukov said tools like the OPEC+ agreement help to bring stability, and he expressed hope that Russia would continue its cooperation with OPEC and other oil-producing countries beyond the expiry of the current deal in 2022, saying:

“Too many factors impact the oil market, uncertainties are hard to predict and sometimes the perfect storm situation makes the market rather volatile, but instruments such as the OPEC+ deal help stabilize the market.”

Dyukov also said that the company had succeeded in creating further spare capacity, with a number of wells currently being drilled. This should enable it to increase liquid hydrocarbons production by as much as 10% in 2022, which would be roughly in line with the current OPEC+ deal.

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