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Russia's LUKoil Says Oil to Cost $60 Next Year After OPEC Deal

© REUTERS / Sergei KarpukhinA worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the West Siberian city of Kogalym, Russia, January 25, 2016
A worker checks the valve of an oil pipe at the Lukoil company owned Imilorskoye oil field outside the West Siberian city of Kogalym, Russia, January 25, 2016 - Sputnik International
The dominating price of oil will stand at $60 per barrel following the Organization of the Petroleum Exporting Countries' (OPEC) decision to curb oil production, Russia's LUKoil oil and gas company Vice President Leonid Fedun said Friday.

MOSCOW (Sputnik) — On Wednesday, OPEC agreed for the first time since 2008 to impose an oil production ceiling totaling 32.5 million barrels per day in an effort to stabilize the global oil market. Non-OPEC countries that expressed a desire to participate in the agreement, including Russia, are expected to curtail oil production by a total of 600,000 barrels daily.

"History of such OPEC operations that have been conducted in the market three times on a large scale shows that oil prices grow by 50 percent. Therefore, with a high percent of certainty I can say that during the next year the price of $60 will be a dominating price," Fedun said presenting LUKoil's analysis of the oil industry's future.

Iran, Iraq to Drive Conventional Oil Production Increase Inside OPEC by 2030

Iran and Iraq will be the driving force inside the OPEC group of oil producers behind the anticipated rise in conventional oil production in the years to come, the vice president said.

"The main sources of increase in conventional oil production among OPEC states by 2030 will be Iran and Iraq," Fedun said.

Iran returned to the global oil market in early 2016 after the negotiating an agreement on nuclear program curbs. Iraq's oil production has been hampered by the rise of Islamists in 2014, but the oil-rich nation has since reclaimed large swaths of land with air support from an international coalition.

Oil Price Increase May Lead to US Shale Oil Production Boost

The recovering prices of oil, spurred by OPEC's decision to freeze output levels, could lead to boost in production of shale oil in the United States, which is not a member of OPEC, the LUKoil vice president said.

"OPEC managed to stop increase in production of shale oil. However, the oil price increase may lead to increase in [shale] production in the United States," he said.

On Thursday, former US Assistant Secretary for Fossil Energy Charles McConnell told Sputnik that the agreement reached by OPEC was not likely to last and if it did, US shale producers would be able to fill the global oil demand.

Russia's Oil, Gas Condensate Output May Reach 551Mln Tonnes in 2020

Production of oil and gas condensate in Russia could reach 551 million tonnes by 2020, the LUKoil forecast said.

According to the company’s forecast of oil market development until 2030, Russia is expected to produce 555 million tonnes a year. The oil production levels are then likely to decrease to 554 million tonnes and 551 million tonnes in 2019 and 2020, respectively.

Cuts in oil production in Russia will not pose a technical problem, Fedun said.

"Technically this [oil production cuts] does not pose any issues," he said.

Earlier in the day, Russian Deputy Minister of Energy Kirill Molodtsov said the Russian Energy Ministry would formulate its final position on joining the Organization of the Petroleum Exporting Countries (OPEC) deal on cutting oil production ahead of the meeting of non-OPEC countries in Doha on December 9.

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