Russia’s oil production dropped slightly in the first days of April compared to the average output in March, a source in the industry told Reuters on Monday, as major producers are getting ready to discuss a massive collective cut amid what looks like an increasingly bitter spat between former allies Russia and Saudi Arabia over who ditched whom in the OPEC+ talks.
So far this month, Russia’s oil production has averaged 11.25 million barrels per day (bpd), down by 0.35 percent compared to the average output of 11.29 million bpd in March, a Reuters source said today.
Russia is not raising its crude oil production because it doesn’t make sense for Russian firms to boost output while the market is oversupplied, a Russian government official told Bloomberg last week.
Early in March, Russia’s Energy Minister Alexander Novak said that Russia could raise its oil production by 200,000 bpd to 300,000 bpd in the short term, with a potential for up to a total increase of 500,000 bpd.
But as oil prices continued to slide and demand continued to plunge, Russian companies signaled later in March that boosting production might not be the wisest thing to do right now. Tatneft’s CEO, Nail Maganov, who boasted weeks ago that even $8 oil is not critical for the company, told reporters that it might not be economically feasible for Russian firms to boost production from April, due to the coronavirus pandemic.
A video meeting between Saudi Arabia, Russia, and other major oil producers, including representatives from the U.S., was slated to be held on Monday, but the meeting was postponed for Thursday after the Saudis and the Russians accused each other over the weekend of dumping the other in the OPEC+ alliance that had tried to manage oil supply and oil prices for the past three years.
Both producers signal that they are ready to talk but that any collective massive cut, 10 million bpd-15 million bpd, as touted by U.S. President Donald Trump, should involve the United States, too.
The U.S. has not given indication that it would take part in such cuts, while analysts think that it will be a tall order for the U.S. to make its free-market oriented individual companies join a global effort for a collective cut.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- IEA: OPEC Can’t Save The Oil Market
- Big Oil Raises Debt To Ride Out Price Crash
- Don’t Underestimate The Resilience Of U.S. Shale