Oil price stability is needed to have predicability in the global oil market, and volatility in oil prices must end immediately, Turkey's Energy and Natural Resources Minister Fatih Donmez said Saturday.
Donmez attended Friday via webinar G20 energy ministers conference, which was also attended by officials from the International Energy Agency (IEA), International Energy Forum (IEF) and the Organisation for Economic Co-operation and Development (OECD).
The impact of the novel coronavirus (COVID-19) on global markets, social life and economic activities around the world was the main topic in the conference, Donmez told Anadolu Agency in an exclusive interview.
"All actors' main point, whether they are oil producing or consuming countries, was that there should be cooperation and solidarity in supply and demand sides of oil market," he said.
"Price volatility in recent weeks was their main concern. Rather than high or low oil prices, lack of projection and volatility in oil prices have a higher negative impact on the market," he added.
The energy minister noted that while there was a supply-demand balance of 100 million barrels per day (bpd) in the world before COVID-19, now there is a decline of 20 million bpd on the demand side.
This is due to stalled transportation industry in the world since two thirds of global crude output is used in transportation and the rest is used mostly in petrochemistry, he added.
Donmez reminded that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producing countries agreed earlier Friday to curb their total production by 10 million bpd, which could later increase to 13-14 million bpd after more countries join in.
- Gas prices also fluctuating
The change in crude oil prices are reflected to natural gas prices on an average of six months usually, according to market fundamentals, but Donmez said there is already fluctuation in gas prices at this time.
Noting that there are usually long-term contracts in the natural gas market, rather than spot prices in crude oil, he said Turkey mostly purchases its gas via pipelines, but there are some liquefied natural gas (LNG) purchases as well.
"There are countries that we buy LNG from. We buy from them when spot daily prices are affordable. However, there is fluctuation in those prices as well because of the contraction in demand," he explained.
"As an energy consuming country, we told at G20 energy ministers meeting that we wish price volatility [in oil and gas] to end immediately since it negatively impacts market predictability," Donmez said.
"For high energy demand countries, such as Turkey, decline in prices is an advantage to lower our costs. But, there is a limit to turn this price decline to an advantage as well. Because, our citizens have started to use less oil, especially in land and air transportation [due to COVID-19]," he explained.
- Thanks to employees in energy sector
The minister said he wishes energy markets to return to its competitive nature under normal conditions very soon, and thanked all employees in Turkish energy sector during the current coronavirus era.
"It is very important for our citizens to have uninterrupted access to energy goods and services during these hard days. Health and safety of our employees in the Turkish energy industry is very important. I want to thank all of them. They are working with great dedication to make sure energy services continue without any disruption," Donmez concluded.
By Ovunc Kutlu