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St Petersburg Economic Forum: Roundup

New oil price records likely soon on US sanctions policy: Rosneft CEO Sechin

St Petersburg: May 25, 2018


The CEO of Russia's top oil producer Rosneft, Igor Sechin, Friday warned that oil prices could hit new records in the near future due to the sanctions that the US is implementing against some hydrocarbons producing countries.


"The policy of sanctions and ultimatums in respect of hydrocarbons markets cannot help but establish a 'sanctions premium' to the price," Sechin said.


"I don't rule out that quite soon we'll be able to talk about a sanctions commodity supercycle and we'll see new price records shortly," he said, speaking to a key energy session at the St Petersburg International Economic Forum, which traditionally gathers together the top names in the oil sector.


Sechin estimated that the latest US sanctions, including action targeting Iran, Venezuela and Russia, could affect a third of combined global crude reserves.


"This is a sort of a negative global record, that has never happened previously," he said.


At the same time, Sechin said he sees no threat to global market development on the demand side, which is likely to remain strong.


"There are mighty sectors of the world economy that ensure the growth of crude consumption, such astransportation and petrochemicals sector," he said.


On Thursday, Russian energy minister Alexander Novak estimated geopolitical tensions, including potential re-imposition of sanctions against Iran, have added $5-7/b to the oil price.


Oil prices have reached their highest since November 2014, with Brent crude breaching the $80/b level at various points in the past week as supply risks related to Venezuela and Iran have buoyed the market.


"Without doubt, the market is reacting sharply to such announcements as the US withdrawal from the nuclear deal, and this means uncertainty regarding Iran's production. In my view, from $5/b to $7/b in oil price today are risks associated with the situation in Iran," Novak said in an interview with the Echo Moskvy radio station.


--Staff, newsdesk@spglobal.com
--Edited by James Leech, newsdesk@spglobal.com



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