Oil prices hit a fresh seven-year high and Brent hit $99 a barrel early on Tuesday amid an escalation in the Russia-Ukraine crisis.
The optimal oil price for the market is $55-$70 per barrel, Russian Energy Minister Nikolai Shulginov told Energy Intelligence on Tuesday.
High oil prices are good for Russia’s budget and for its hard-to-recover oil resources and projects, on the one hand, but oil so high is also hitting other sectors of the economy and slows demand growth, on the other hand, the Russian minister said.
Asked why Russia doesn’t support more production from OPEC+ if Russia believes that $55-$70 is the optimal price, Shulginov told Energy Intelligence that the country is “increasing production within the agreed volumes.”
Russia looks to increase production and exploration in the coming years, the minister added.
Referring to Moscow’s plans about the Arctic Shelf, Shulginov told Energy Intelligence, “Although these are costly reserves, we still believe that Arctic resources can be utilized in future. The Arctic is a storeroom. There is not only oil, but also gas and potentially rare-earth metals.”
Commenting on whether Russia is interested in high natural gas prices, the minister noted, “High prices are not beneficial for Gazprom and Russia at all, because then consumption decreases, purchases go down, the economy slows down. We are not in favor of high prices, we are in favor of stable supplies.”
The latest escalation of the Russia-Ukraine crisis sent oil prices surging close to $100 a barrel early on Tuesday, with Brent Crude hitting a new seven-year high of $99 before easing to $97 per barrel.
Europe’s natural gas prices also spiked, as the market fears a disruption to energy supplies from the major oil and gas exporter, Russia.
The benchmark gas prices in Europe jumped by double digits after Germany said it was freezing the certification of the Russia-led Nord Stream 2 pipeline in light of the latest events.