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Russia Proceeds With Cuts, Compliance Still Very Low

Oil Barrels

Russia’s crude oil output dropped in February to some 11.10 million bpd from 11.11 million bpd in January and from the more than 11.20 million bpd in October last year – the reference level for OPEC/non-OPEC production cuts, sources familiar with the data told Reuters on Wednesday.

Calculations made by Reuters show that last month’s Russian cut from the October baseline level stood at 100,000 bpd, meaning that compliance is just 33 percent.

Russia, however, has not promised outright production cut of the full 300,000 bpd it pledged to take off the market. It has always said that the cut would be gradually implemented by the end of the first half of this year, the initial period that OPEC and 11 non-OPEC nations – led by Russia – had set for a coordinated effort to reduce global oil supply.

Officially, Russia has said it cut 117,000 bpd in January. Earlier this week Russian Energy Minister Alexander Novak said that his country’s oil production in February would be lower than the January output, with Moscow cutting more than the 117,000 bpd cut it made in the first month of the year. Novak said that Russia would be trying to speed up the gradual cutting of the 300,000 bpd, adding that anything is possible, when asked whether the 300,000-bpd-cut could be reached in early April. The timing will depend on the capabilities of the companies, the minister noted.

Related: OPEC Struggling To Hold On To Asian Market Share

Russia’s Energy Ministry will be releasing official production data for February on Thursday.

Unlike Russia and the general low compliance at non-OPEC nations -- mostly dragged down by Moscow’s gradual cut -- OPEC compliance so far has been estimated by international agencies, industry experts and OPEC itself at exceeding 90 percent, courtesy of deep cuts by Saudi Arabia.

Last week OPEC said that the combined compliance rate of OPEC producers and the 11 non-OPEC nations reached 86 percent in January, and urged all parties “to press on towards full and timely conformity.”

By Tsvetana Paraskova

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