Alexander Frolov, Deputy Director General of the National Energy Institute, spoke in an interview with the newspaper News about the North Sea benchmark and Brent crude. He suggested that Brent could either hold steady at current levels or climb to around $80 per barrel in May. In the prior week, oil prices showed a volatile trajectory: they dipped by 10 percent from about $80 to roughly $72, before rebounding to the mid-70s range and rising above $75. The analyst indicated that the market has already absorbed a notable amount of downside risk, and further declines would require a shift in fundamental balance that he does not anticipate in the near term.
Frolov explained that a sharp drop in oil prices is unlikely at this stage due to the presence of a regulatory framework led by OPEC Plus, which actively monitors the supply-demand balance across the global energy market. He noted that the effect of the voluntary production cuts announced by member countries in April is expected to take hold in the market with greater clarity by the end of May, as the adjustments filter through the production chains and inventories respond to the revised quotas. This transition period could influence price dynamics in the coming weeks, potentially supporting prices if demand remains resilient and supply adjustments are realized as planned.
The analyst highlighted that sustaining prices around $70 per barrel would be economically difficult for a number of producers, particularly the United States and Norway. He explained that a decline in price tends to compress profit margins and incentivize lower output over time, a pattern reminiscent of the downturn experienced during the 2014-2016 period. In such an environment, producers may restrain supply to preserve cash flow and support price levels, which in turn can create a self-reinforcing cycle of tighter markets and price stabilization at a higher level than the immediate downturn would suggest. Frolov stressed that if prices persist below what he considers the optimal investment corridor, roughly $80 per barrel, for an extended period, the market could face a supply shortage that is not necessarily greeted with enthusiasm by either producers or buyers.
In early May, Deputy Prime Minister Alexander Novak announced that Russia is currently reducing its daily oil production by 500 thousand barrels compared to February. This strategic reduction is part of a broader plan tracked by independent observers to gauge the effectiveness of the policy and its implications for global supply. The ongoing monitoring by external sources is expected to provide additional context on how these adjustments translate into market movements, including price volatility, inventory levels, and the behavior of competing producers. The combined effect of such national policies and coordinated efforts within the OPEC Plus framework will likely shape oil pricing and market sentiment in the near term, influencing decisions by traders, refiners, and end users alike.