Market to balance global oil supply and demand - Novak
MOSCOW. Nov 26 (Interfax) - The market will balance global oil supply and demand, Energy Minister Alexander Novak said.
"The oil sector develops cyclically and today we are located at the stage where prices are declining due to overproduction, which will result in lower production volumes, idling of inefficient projects, that balance production with demand and equalize the price at an acceptable level. These are absolutely market factors," Novak said at a press conference on the results of the Russian-Turkish intergovernmental commission.
Oil prices are declining due to the supply and demand mismatch, among other factors, Novak said. Supply has exceeded demand by approximately 700,000 barrels per day in Q3 and Q4 2014, which in turn is the result of heavy investment in production when oil prices were higher, enabling development of such projects as, for example, shale oil production in the U.S.
OPEC output is also higher, growing by 1.2 million bpd in Iraq, Iran and Libya compared with previous projections, he said.
In addition, U.S. dollar strengthening has put downward pressure on oil prices, he said.