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Russia has cut 250,000 bpd of its crude oil output, with another 50,000 bpd to go as per its agreement with OPEC, Energy Minister Alexander Novak told media today, adding that the other 50,000 bpd will be cut by the end of the month.
The undertaking took as basis the country’s record-high October output, which exceeded 11 million bpd. Earlier this month, Novak said that the ministry will start discussing Russia’s possible participation in the production cut extension that is currently being negotiated by OPEC members in order to increase prices further, having failed to push them up to $60 a barrel since the start of the year.
Novak said last week that “It still remains unclear whether the agreement should be extended. We’ll have consultations with our companies and other countries in the nearest future, and we have to see how he situation unfolds in April and consider outlooks for May and June.”
Separately, however, Novak said that crude oil output in Russia should hit a record-high 549 million tons (about 4 billion barrels) this year, despite the cut.
Just yesterday, Kuwait’s Oil Minister Essam al-Marzouq said that Russia had given its preliminary consent to the extension. The minister was speaking on the sidelines of a conference in UAE, where Saudi Arabia’s top oil official confirmed that talks are ongoing and that “consensus is building.”
The need to extend the agreement, which was planned to cut off some 1.8 million bpd from global supply, became evident before the end of the first quarter, when it emerged that instead of declining, global supplies had actually increased.
Related: Oil Prices Fall Further As U.S. Rig Count Inches Higher
This was primarily attributed to excessive stockpiles and refinery maintenance season, which in the U.S. led to a string of seven-figure inventories increases, making markets nervous. Now that refinery maintenance is gradually ending across the world, demand for the commodity should pick up, especially in the second half of the year.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.