Russia expects a long and gradual revival of the oil market after the pandemic this year crushed energy demand across the world. “The recovery won’t be fast, it will take quite a while before the pre-crisis levels can be reached,” Russia’s Energy Minister Alexander Novak said Sunday. In 2020, on the back of coronavirus lockdowns, global oil demand is set to decline by as much as 10% compared to last year, he said in his address to a two-day online meeting of G-20 energy ministers.
The recent rebound in the oil market has stalled as fuel consumption remains weak in the U.S., while several European governments have reintroduced measures to keep a lid on the coronavirus. At the same time, the market is struggling to absorb the returning supply. Oil traders have reported a sharp increase in Iraqi exports for next month, while output from Libya has shown signs of rising as its civil war abates.
Neil Atkinson, the International Energy Agency’s head of oil industry and markets, said at a Bloomberg event last week that the agency is more likely to downgrade its demand forecasts than lift them in its next report. The IEA has already slashed its forecast for 2020 by 400,000 barrels a day in the past two months to 91.7 million barrels per day.
Russia’s cooperation with the Organization of Petroleum Exporting countries is an example of joint efforts to balance the market, Novak said. “Our task as the leaders of the energy industry is to demonstrate endurance and unity in the face of such challenges,” he added. Russia is doing its best to prevent a collapse in the global energy market and the world’s economy, Novak said.
OPEC+, which includes Russia, indicated earlier this month that it stands ready to take preventive action, if needed, to balance the market. The group will be “proactive and preemptive,” according to a statement from the Joint Ministerial Monitoring Committee, which oversees the cartel‘s production cuts.