Russia said that the Gulf countries are to blame for the crisis in the world oil markets. According to Andrei Belousov, Russia's first deputy prime minister, Russia had never sought a sharp drop in oil prices or an end to cooperation with OPEC.
In early March, Russia and OPEC could not agree on how their agreement on reducing oil production should work. OPEC wanted to expand the cuts to oil production, while Moscow proposed to expand the existing restrictions. The conflict occurred against the backdrop of declining demand for oil due to the impact of the coronavirus pandemic.
The conflict between Saudi Arabia, which is the main member of OPEC and Russia, the world's second largest oil exporter, has led to a collapse in the oil market.
Andrei Belousov noted that the Russian position has never been concerned with the fall in oil prices. "Even oil companies, which are obviously interested in supporting their markets, had no position on the termination of the agreement (OPEC+), " he told the Russian news agency TASS.
According to him, Russia proposes to expand the existing oil production limits by at least another quarter and possibly until the end of 2020. "But the Arab partners have taken a different position," TASS quoted him as saying.
Igor Sechin, chairman of Russia's biggest oil producer Rosneft, has always opposed the three-year agreement, saying it allows members like the United States to increase their market share by cutting supplies. He believes that world oil prices could return to $60 per barrel by the end of 2020 if shale oil is pushed out of the market. Belousov believes that oil prices will be balanced at about $35-40 per barrel.
The price of a barrel of Brent crude oil collapsed by 24.1% on March 9, and on March 18, it fell below $25 for the first time since May 2003. Thus, in less than two weeks the barrel of Brent fell in price by more than 40%, and since the beginning of the year - almost three times (on January 8 oil was traded about $72 per barrel).
On March 18, the price of Russian Urals oil, which traditionally trades at a discount to the price of Brent, fell below $19 per barrel.
However, on March 19, the price of a barrel of Brent rose by more than 14%, rising above $28, and on March 20 went above the mark of $30. At its peak on Friday, it rose to $30.67. Even then, however, the price of oil remains well below the Russian budget cut-off price ($42.4).
During the week, the Russian Central Bank made a series of interventions into the currency market, selling almost 33.4 billion rubles of foreign currency reserves. These sales are carried out as part of the Finance Ministry’s directive after the price of Urals oil fell below the cut-off limit set out in the 2020 budget.
The situation is exacerbated by the COVID-19 coronavirus pandemic. The head of the Russian Finance Ministry Anton Siluanov called the coronavirus a threat bigger that the fall in oil prices. According to the minister, the pandemic has a negative impact on entire industries, because "all sectors of the economy are shrinking."