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Russian Oil Chief Sees 'Major Imbalances,' Rising Prices Resulting From U.S. Sanctions

Rosneft Chief Executive Igor Sechin
Rosneft Chief Executive Igor Sechin

The head of Russia's state-controlled oil giant Rosneft is warning that U.S. sanctions on Iran and Venezuela will trigger "major imbalances in the oil market."

Rosneft Chief Executive Igor Sechin, a close ally of President Vladimir Putin, on October 25 predicted an increase in oil prices and a reduction in global oil production as a result of the sanctions.

U.S. officials have said they want the sanctions on Iran's oil sector, which are scheduled to go into effect on November 5, to reduce Iran's oil exports to "zero," and have been pressuring countries around the world to stop buying oil from Iran.

"We are going to squeeze Iran because we think their behavior in the Middle East and, really globally, is malign and needs to be changed," U.S. national security adviser John Bolton told RFE/RL in an interview on October 25.

But Sechin, speaking at the Eurasian Economic Forum in Verona, Italy, said the resulting rise in oil prices means that "those who are going to pay are also going to be U.S. and European consumers."

Oil prices have soared into the $80 a barrel range since April, when U.S. President Donald Trump announced he was abandoning Iran's 2015 nuclear agreement with world powers and reimposing economic sanctions.

Trump also has ordered a series of sanctions of Venezuela, which has some of the largest oil reserves in the Western Hemisphere and like Iran has been struggling to keep producing and exporting oil in the face of sanctions.

Trump has sought to put the blame for rising prices on the OPEC oil cartel rather than the collapse in production seen in Iran and Venezuela.

Official statistics show Iran's oil exports have fallen by about half from a peak of about 2.5 million barrels a day in April to about 1.2 million barrels a day in October.

Meanwhile, Saudi Arabia, the biggest oil producer in OPEC, which has promised to make up for Iran's shortfall, has said it has spare capacity to produce about 1.5 million barrels more a day.

"OPEC's free production capacity is not sufficient to compensate for the lost volumes of production" from Iran and Venezuela, Sechin said.

The Rosneft chief denounced U.S. sanctions -- a slew of which have also targeted Russia in recent years -- as "arbitrary," and claimed they are designed to advance U.S. economic interests at the expense of others.

"In a number of sectors - shale mining, arms exports - the U.S. economy has rather pragmatically won at the expense of sanctions imposed against other countries," Sechin said.

He estimated that Germany, a major Russian trading partner, has borne "40 percent" of the economic damage caused by sanctions on Russia, whereas the share of economic damage borne by the United States is only 0.6 percent.

The United States and European Union both imposed sanctions on Russia starting in 2014 over its annexation of Ukraine's Crimean Peninsula and backing of separatists fighting the government in eastern Ukraine.

Sechin and Russia's oil sector were both targeted by the Western sanctions. However, Sechin boasted that Russia's oil production has been rising despite the sanctions and is expected to increase further by the end of the year.

With reporting by dpa, Reuters, and Interfax