OPEC+ Needs to Keep Crude Below US$100: Lukoil CEO

Oil prices should be kept below US$100 per barrel to avoid investments in “inefficient projects,” the boss of one of Russia’s leading oil companies has warned. Vagit Alekperov, CEO of Lukoil — the country’s second largest producer — made the claim in an interview with Kommersant newspaper as he called for the OPEC+ alliance to keep oil prices between US$65 and US$75 per barrel. Brent crude has mainly hovered in that bracket since April, briefly going above US$75 per barrel in July before falling back in August. OPEC+ last week resisted pressure by the US to increase oil production above a planned rise of 400,000 bpd. Alekperov said: “I think that the OPEC+ alliance was created to last forever, not for just some period of time.”

He added: “I wouldn’t want to see oil above US$100 a barrel again — this would lead to more investment in inefficient projects yielding low profits, and again lead to a collapse on the market.” The current OPEC+ agreement means Russia is able to increase output at a rate of 500,000 bpd through the end of April 2022. This will see Lukoil and other Russian oil producers add more barrels each month on a pro rata basis, as per each individual company’s respective share in the country's total crude output. Russia’s output of liquid hydrocarbons should recover to the pre-COVID level by end of 1Q 2022, Kirill Bakhtin, oil and gas analyst at Moscow-based Sinara Financial Group told Arab News by phone.

“Currently the company has stopped up to 90,000 bpd of production per day, and we hope that this (volume of crude output that has been stopped) will be in demand by the market,” Alekperov said. Alekperov warned the price of crude is set to change next year. He said: “After all, the oil price is being artificially regulated. “We understand that due to production restrictions within OPEC+ the current price does not correspond to reality because a fairly large volume of production has been stopped. "Objectively, the (real) price will become known after September 2022 when the OPEC+ agreement expires.”