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Russia is raising its oil production this month compared to May and expects to further boost output in July, Russian Deputy Prime Minister Alexander Novak said on Thursday.
Russia is currently seeing a significant increase in its production so far this month compared to May, an increase of around 600,000 barrels per day (bpd), Novak said on the sidelines of the St Petersburg International Economic Forum, as carried by Russian news agency TASS.
“I think there are reasons to believe we will continue raising oil production in July,” Novak said.
“Actually, we are now already close to recovering production to the level from February,” the deputy prime minister added.
This month, Russia plans to boost domestic refining, which will lead to a “slight decline” in Russian oil exports, Novak said.
The Western sanctions, however, are hammering Russian oil production and exports, despite the fact that Russia is selling record volumes of crude to India these days. Russia is boosting exports to India and China, but analysts doubt the Asian market would be able to absorb all the 4 million bpd of oil Russia was sending to Europe before the war.
Since February, the level just before the Russian invasion of Ukraine, which Novak referred to on Thursday, Russia has had to boost—per the OPEC+ deal—its crude oil production by more than 100,000 bpd in each of the months that followed. But a lack of demand for Russian crude in Europe amid self-sanctioning and a phase-out embargo on Russian seaborne crude imports to the EU has led to reduced supply and shut-in wells in Russia.
The country was already almost 1.3 million bpd below its target production in May, an OPEC+ document seen by Reuters showed on Thursday.
In the near term, Russian oil output is set to decline by 18%—from 11.3 million bpd in the first quarter of 2022 to 9.3 million bpd in the final quarter of 2023 as a result of the EU embargo on both crude oil and refined product imports, the U.S. Energy Information Administration (EIA) said last week.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.