Russia Says it Continues to Cut Oil Production under OPEC+ Deal

• Novak: Russia continued to cut its oil production in May per the OPEC+ agreements.
• Novak said that the scale of the output cut would become clear in about a week.
• Last month, Russia said that it had “slightly exceeded” in April its oil output target under the OPEC+ pact and that it would compensate for the overproduction.

Russia continued to cut its oil production in May per the OPEC+ agreements, Russian Deputy Prime Minister Alexander Novak said on Thursday, in another attempt to reassure the market that OPEC+ producers are committed to the pact and to stabilizing the oil market.  

“Our reduction against April continued in accordance with our OPEC+ agreements,” Novak told reporters on the sidelines of the St. Petersburg International Economic Forum, as quoted by Russian news agency TASS.

Asked about exact numbers for the May oil production, Novak said that the scale of the output cut would become clear in about a week. 

When the OPEC+ members announced in early March their intentions to extend the cuts into the second quarter, Russia changed its production/export cut plan and said that it would reduce supply by 471,000 bpd in the second quarter in the form of cuts to oil production and exports.

In April, Russia pledged to reduce production by 350,000 bpd and exports by 121,000 bpd. In May, the 471,000 bpd reduction would be in the form of a 400,000-bpd cut to production and 71,000 bpd cut to exports, and in June the Russian supply cut would be 471,000 bpd entirely from production reductions.

Output cuts were to account for most of the extra Russian supply cut this quarter, and they could be the result of reduced refining capacity with maintenance in Q2 and refinery rates estimated to have slumped due to Ukrainian drone attacks on Russian refineries. 

Last month, Russia said that it had “slightly exceeded” in April its oil output target under the OPEC+ pact and that it would compensate for the overproduction.

The Russian Energy Ministry said in a statement that the overproduction in April was “due to technical difficulties of cutting production in a large amount.”

“Russia is fully committed to the OPEC+ agreements, plans to compensate for shortfalls in production plans, and will soon submit to the OPEC Secretariat its plan to offset small variations from voluntary production levels,” the ministry said at the end of May.

By Charles Kennedy for Oilprice.com

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