Novak: Russia Expects Oil Demand Recovery in 2021 at 3-5 Mln Bpd

Volatility in the oil market in 2021 will decrease and oil demand will grow by 3-5 mln barrels per day (bpd). Nevertheless, it will not reach the pre-crisis level, which was higher by 6-7 mln bpd against the level of 2020, Russian Deputy Prime Minister Alexander Novak said in an interview with Rossiya 24 TV channel.

“We expect that demand will recover during 2021. As you know, it is still below the pre-crisis level by about 6-7 mln barrels per day. During 2021, there will be 3-5 mln barrels of demand growth,” he said.

“In terms of the current situation, we see that volatility has decreased significantly in recent months, especially after new vaccines have been registered in many countries,” Novak added. He noted that the OPEC+ countries also agreed to prepare a report on production in countries that are not part of the agreement, TASS reports.

At the same time, the emergence of new strains of coronavirus is a factor of uncertainty for the oil market, since it is not yet fully clear how the situation will develop. Market volatility has slowed down, but production recovery will take some time, Novak added.

“Today the price is slightly higher than we predicted. We see that the market is quite optimistic. This is due to the stimulating measures that many countries are introducing, due to vaccinations, so we believe that today there is enough positive: both regarding prices and the balance of demand and supply,” he said.

“Of course, there are still many uncertainties, we talked about them at the meeting. We need to be very attentive to the emergence of various coronavirus strains. It is not completely clear how they will develop, this needs to be monitored,” he added.

Earlier, the OPEC+ countries agreed on the oil cuts parameters in February and March, which will amount to 7.125 mln bpd. Now the countries of the alliance are cutting production by 7.2 mln bpd against the base level. Russia and Kazakhstan in February and March will increase production by 75,00 bpd – by 65,000 bpd and 10,000 bpd, respectively. This increase in production will be offset by proportional and voluntary production cuts by Saudi Arabia.