Lukoil CEO Sees Chance of Oil as Low as $25 on Wild SwingsStephen Bierman and Dina Khrennikova
Crude prices may fall by half to as low as $25 a barrel given violent movements in the market, according to the head of Russia’s second-largest oil company.
“Yesterday prices swung 10 percent, that’s never happened,” OAO Lukoil Chief Executive Officer Vagit Alekperov said today in Moscow. “The price may go as low as $25.”
Oil is down by more than 50 percent in the past six months, dragging the economy in Russia, which gets about half its budget income from oil and gas, to the brink of a recession. The nation faces a 3 percent shrinking in its economy and 2 trillion ruble ($31 billion) fiscal gap this year if oil prices trade at about $60 a barrel, Economy Minister Alexei Ulyukayev said this week.
Brent crude, a global benchmark, was below $50 today. The price oscillated by as much as 7.7 percent yesterday.
Lukoil won’t change the production plans at its West Qurna-2 project in Iraq, Alekperov said. It plans to sign a deal next month for development of the Kandym gas field in Uzbekistan, he said. In late 2014, Lukoil Vice President Leonid Fedun said Chinese companies were interested in joining the project.
The International Energy Agency expects slower output by oil nations that aren’t in the Organization of Petroleum Exporting Countries this year, leading to a price rebound. It cut the estimate of growth in non-OPEC supply by 350,000 barrels a day to 57.5 million, in its latest monthly market report. OPEC separately reduced its estimate of the amount of crude it needs to supply in 2015 by 100,000 barrels a day to 28.8 million.