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The leader of the non-OPEC group of the OPEC+ pact, Russia, is showing an unprecedented commitment to the ongoing record collective production cuts by almost complying with its share of the reductions.
As part of the OPEC+ deal sealed in April, Russia pledged to cut its production to 8.5 million bpd in May and June from a February 2020 baseline, or by 19 percent, from February 2020, Russian Energy Minister Alexander Novak told Interfax in an interview in April.
Russia had 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.
But so far in June, Russia’s crude oil production has averaged 8.549 million bpd, according to estimates by Russian news agency TASS based on official government figures. This production level between June 1 and 15 is just above the 8.5-million-bpd ceiling for Russian crude oil production under the deal.
As early as in the middle of May, Russia was signaling that it would try to stick to its commitment in the OPEC+ deal. Between May 1 – the start of the new cuts – and May 19, Russia’s crude oil production averaged 8.72 million bpd, as per Reuters estimates. For the full month of May, crude oil output in Russia averaged 8.59 million bpd, and now estimates show that Moscow is moving closer to the 8.5-million-bpd target in June.
In these record cuts in response to the crash in oil demand, the leaders of the OPEC+ pact – Saudi Arabia and Russia – had all the laggards (such as Iraq and Nigeria) commit to full compliance with the cuts before agreeing to a one-month extension of the record production reductions.
Earlier this month, OPEC+ agreed to extend the record production cuts of 9.7 million bpd by one month through the end of July, contingent on all countries in the pact complying 100 percent with their quotas and compensating for their lack of compliance by overachieving in the cuts in July, August, and September.
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.