Igor Sechin: Supply and Demand to Converge by the End of 2016

The head of Rosneft, the Kremlin-controlled oil company, has blamed ‘robot’ traders and producers in the Middle East and US for crushing oil prices, in a sign Moscow is unlikely to back calls for coordinated output cuts with OPEC.

Igor Sechin, the close ally of president Vladimir Putin and Rosneft chief, indicated he believed Saudi Arabia’s decision to lift oil production had been politically motivated, write David Sheppard and Neil Hume.

Speaking in London, Mr Sechin said major oil producers could helpfully agree to cut production by 1m barrels per day, but he did not indicated that Russia would be party to such an agreement.

“At the end of 2014 some Middle East producers followed the US in their desire to increase production,” Mr Sechin told London’s International Petroleum Week. “They have deliberately created this situation and they are committed to low prices.”

Mr Sechin went on to say Saudi Arabia’s plans to privatise part of its state oil company, Saudi Aramco, was welcome as it would ‘decouple’ its decision making from politics.

“It would allow more clarity about its efficiency and reserves,” Mr Sechin said. “It will make their decisions independent and decoupled from politics. It will make them more responsibible.”

Russia, one of only three countries of producing more than 10m barrels a day, alongside the US and Saudi Arabia, has been asked by OPEC member Venezuela to join discussions about possible coordinated output cuts.

But Mr Sechin has been a long-term opponent of Russia lowering production, arguing its climate makes it difficult and that it has the world’s lowest cost of production.

Russia has also found itself on the opposite side from Saudi Arabia during its intervention in Syria in support of President Bashar Assad.

Mr Sechin also struck a more bullish tone on oil prices than many at the annual conference, which has so far been dominated by bearish views.

He blamed ‘financial players’ and automated ‘robot’ traders for driving down the price, saying the collapse to near $30 had little to do with supply and demand.

He forecast prices would recover later this year as US shale output slows. “We believe that in the coming years US shale will lose its grip on the market,” he said.

Mr Sechin said supply and demand would converge by the end of 2016.