It looks like Russia is really trying to comply with its share of the OPEC+ production cuts this time, unlike in previous deals when it had regularly exceeded its cap, attributing higher production to condensate output.
In the new round of cuts, Russia is said to be nearly complying with its quota, two sources with knowledge of Russia’s oil and condensate production so far in May told Reuters.
As part of the OPEC+ deal, Russia pledged to cut its production to 8.5 million bpd in May and June from a February 2020 baseline, or by around 2 million bpd, or by 19 percent, from February 2020, Russian Energy Minister Alexander Novak told Interfax in an interview last month.
Russia has to cut its oil production from around 11 million bpd to 8.5 million bpd—and many analysts expected that Moscow would not be able to fully comply with its share of the cuts, again.
Referring to Russia’s uneasy task to cut 2 million bpd as part of the OPEC+ deal, Russia’s Deputy Energy Minister Pavel Sorokin said earlier this month that Moscow expects to achieve “the maximum reduction level as soon as practicable.” Related: The Oil Bulls Are Back
According to Reuters’ sources, Russia’s combined oil and condensate production averaged 9.42 million barrels per day (bpd) between May 1 and 19. Excluding condensate output, which is not part of the Russian quota within OPEC+ as of this year, crude oil production averaged 8.72 million bpd, as per Reuters estimates. This is close to the 8.5-million-bpd quota, especially considering Russia’s far-from-perfect track record in complying with the cuts.
Three weeks into the new deal, Russia, as well as OPEC’s leader Saudi Arabia, are trying to assure the market that the OPEC+ group is taking the task to rebalance the market very seriously.
Last week, Russia’s Energy Minister Alexander Novak and Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, issued a joint statement, saying that “Our two nations remain firmly committed to achieving the goal of market stability and expediting the rebalancing of the oil market. We are confident that our partners within OPEC+ are fully aligned with our goals and they will comply with the OPEC+ agreement.”
By Tsvetana Paraskova for Oilprice.com
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