21 Apr 2022 18:08

Energy Ministry: Current discounts on Russian oil a short-term factor, no spare production capacity

MOSCOW. April 21 (Interfax) - Russian oil and other forms of energy are being sold at a discount, but this is not a long-term factor as for the first time there is no spare production capacity in the world, First Deputy Russian Energy Minister Pavel Sorokin said at a meeting of the Energy Ministry's public council.

"Even if all production capacity that now exists in the world is used, this will not be quite enough to replace our exports. But even if we assume that the world will work like this for some time, then this is probably the first time the global oil industry is operating without spare capacity. This means that any glitches, any disruptions that may occur will lead to a colossal distortion of the market and price growth. So discounts that we are seeing are the result of the unlawful sanctions, the unlawful pressure that is being exerted," Sorokin said.

"We don't think this can be maintained in the long term in a normally functioning market. Yes, some discounts are of course possible, and the market will adapt and pricing will change, but this is not a long-term factor, in our view," he said.

Sorokin said that besides discounts, many companies were "working with deferred payments, whereas before they were working with advance payments."