The return of Iranian crude to the global oil market after sanctions are lifted won’t have a significant impact on prices, Russian Energy Minister Aleksandr Novak said, adding that shale production will see a greater effect.
"I don’t think there will be any great influence. The market has assessed and absorbed all of [Iran’s comeback to the oil market] long ago," Novak told journalists on Friday. He said that the oil prices will primarily be influenced by prime costs and the level of shale production.
Novak added that Iranian oil volume entering the global market would require a redistribution of quotas by OPEC.
He said that the average of $60 a barrel would be a normal oil price for producers worldwide. If prices increase to above that mark, the United States will increase its number of oil rigs.
Lower oil prices have already cut the number of drilling rigs in the US to 650 units from 1,600, according to Novak. However, this was accompanied by growing efficiency, as extraction technology is developing rapidly, he added.
The cost of shale oil production has reduced over the last five years by $20 per barrel and “shale is feeling very well" at the current price level of $50-60 per barrel, Novak said.
In Russia the cost of oil extraction without taxes stands at $3-15 per barrel, he added.
Russia plans to discuss the possibility of returning of its companies to Tehran’s oil and gas projects, according to the minister. A regular meeting of the permanent Russian-Iranian commission on trade-economic cooperation is expected to be held in Moscow in autumn.
"If the sanctions are lifted, our companies would like to return to projects in which they took part previously," he said.
In April, Russia’s biggest independent oil firm Lukoil reopened its office in Iran and said it would resume operations as soon as sanctions over the country’s nuclear program are lifted. The company wants to return to the Anaran oil project which it had been forced to withdraw in 2010.
Iran has about 30 million barrels of crude in storage, estimated to be some of the largest reserves in the world. Around 200,000 barrels of crude exports per day is expected from the country in the short-term to add to the global oil glut.
On Tuesday, Iran and six leading world powers reached a historic conclusive deal on the Iranian nuclear industry. The economic sanctions against Iran would be lifted immediately after verification of its compliance with the deal. They can be restored within 65 days if Iran doesn't comply with the terms of the deal.
Western countries accused Iran of seeking a way of military nuclear activities, which it asserted was solely peaceful.
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