On May 25, 2017 OPEC agreed to extend oil production cuts for another nine months and to start consultations on this issue with non- OPEC countries. This decision came as "a wise market move that puts the tools of such cuts in the category of effective market mechanisms for maintaining stability of global oil markets," said founder of Fund Energy Igor Yusufov.
According to the former Russian Energy Minister the reason for the extension is that the cuts are brining "a sustainable recovery in oil prices at the level of fair prices – those ones which are comfortable for both producers and consumers."
On the eve of the OPEC meeting in May, Igor Yusufov gave a great number of interviews, in which he expressed his opinion on this anticipated decision based on personal experience of the global energy diplomacy.
G8 Meeting of Energy Ministers in Detroit in 2001. The photo from Oilman Magazine.
«Drawing on the previous experience of the first ever crude production cut — I negotiated in 2001 as Russian energy minister with fellow OPEC ministers — indicates that even the fact that such talks could take place would calm down the markets and contribute to their mid-term stability”, he stressed in the interview to Houston OILMAN Magazine.
“Then Russia with OPEC countries agreed first solidarity production cuts and the 'solidarity cuts' let the global market price rise by a quarter. Thus, macro-economic goal was achieved”, - he said to the Turkish Agency Anadolu. According to I. Yusufov, quoted by the agency, oil price stabilization around $51-$55 would allow companies to invest in new projects, this price is also comfortable for the consumers, for which it creates an excessive financial burden.
“Energy diplomacy is sui juris and adequate”, said Founder of Fund Energy in the interview to Nigerian SweetCrude. “In my opinion, the OPEC/non-OPEC mechanism Dr. Rilwanu Lukman, former OPEC Secretary-General, Ali Rodrigues and I launched 16 years ago proved its effectiveness under qualitatively new conditions of hydrocarbons production diversification and globalization”.
“Cooperation with OPEC is effective, and a price increase of $10 per barrel means an additional income of some $30billion for the Russian budget”, stated Igor Yusufov to EnergyVoice. “According to experts at Fund Energy, an investment fund which I founded, a nine month extension of the OPEC deal would stabilise the Urals price at $51 to $53 per barrel, compared to $41 with no extension. The extension would be worth $7.5 billion to the Russian budget in 2017 and $5 billion in 2018.”
Former OPEC Secretary-General Dr. Rilwanu Lukman, Russian Energy Minister and OPEC Secretary-General Ali Rodrigues. Moscow 2002
"The supremacy of purely pragmatic economic interest proclaimed by Donald Trump is a very well timed slogan in terms of the development of the oil markets," Yusufov told The Street in an exclusive interview. "Oil producers are in the same boat, and if someone is going to destroy a shaky compromise achieved by other passengers, the whole ship can go down”. If U.S. producers can’t be persuaded to limit supply alongside the Saudis and Russians, the resulting battle for market share could “destroy the market,” Yusufov, the former Russian minister, warned in his report to Bloomberg.
In an interview with the reporter from London magazine Petroleum Economist I.Yusufov stressed that "the new US administration has set as a goal the achievement of energy independence from OPEC. It is quite realistic keeping in mind another American intention: to boost shale oil and gas production both for internal needs and export. But at the same time the effectiveness of dialogue with OPEC is now obvious. Russia would be ready to implement its expertise in this dialogue aimed at sustainable stability of global energy markets".
Referring to the technological aspects and implications of the oil production cuts made by major producers, Igor Yusufov reported in The Wall Street Journal, “ U.S. shale producers wouldn’t attempt to enter core OPEC and Russia markets where prices are too low for them to compete… The fact is that shale oil and gas are doing well in markets that start from a certain price ".
“While OPEC tries to control the oil market, former Russian Energy Minister Igor Yusufov advocates a dialogue with American shale producers, - writes a leading business newspaper of Germany Handelsblatt on May 25. “In his opinion, it is that which can help both producers and consumers in the long term”.
The London magazine Petroleum Economist provided I.Yusufov’s interview with his photo with former U.S. Secretary of state James Baker
made in Houston on the opening day of the First U.S.-Russia Commercial Energy Summit.
“Instead of analyzing possible losses from the influx of American hydrocarbons to traditional markets, I would propose a return to the process of U.S.-Russia Commercial Energy summits. I had the honor of being the Russian co-organizer of the first summit in Houston in 2002 and the second in Saint Petersburg a year later and now I would support the organization of a third one”, the London edition Energy Voice quoted I.Yusufov’s words. “In addition to the traditional agenda, which comprises oil and gas technologies, prevention of oil spills, the development of new energy sources, Russia and America could discuss the future of energy markets under new conditions. Fund Energy would be glad to contribute to the success of this forum. The main theme would cover the necessity for all oil producers to cooperate and not to compete. Global economic development will require considerable amounts of hydrocarbons over the coming decades, and there will obviously still be a place for all fair producers. On OPEC, I would stress that on May 25, when the final decision will be made on the oil production cut extension, I would hope that the next step would be a dialogue on the future of these energy markets with American participation”.