Russia will cut oil exports by 300,000 barrels per day in September, Deputy Prime Minister Alexander Novak has announced. Russia has already pledged to cut oil output by around 500,000 bpd from March until year-end.
"Within the efforts to ensure the oil market remains balanced Russia will continue to voluntarily reduce its oil supply in the month of September, now by 300,000 barrels per day, by cutting its exports by that quantity to global markets," Novak has said.
The news comes shortly after Saudi Arabia said it would extend its unilateral voluntary cut of 1 million barrels per day into September, and that these output cuts could be extended and/or deepened.
Oil prices rose 1% minutes after the Saudi announcement, though it was largely expected by the market.
Since then, oil prices have continued to rally.
As of Thursday at 11:38 a.m. ET, Brent crude was trading up 1.74% at $84.65, while WTI was trading up 1.91% at $81.01, breaching the $80 resistance mark.
Earlier this week, Russian President Vladimir Putin signed into law tax code measures that will narrow the discount of Urals (Russia's flagship crude) to Brent to $20 per barrel from the current $25 discount. That measure will go into effect in September.
The price of Russia's ESPO crude blend has also risen to an eight-month high. The discount for ESPO vs. Brent is now the narrowest since the embargo went into effect in December, buoyed by strong demand from China's independent refiners as well as India's refiners.
The new production cuts come as India's Russian oil imports for July recovered to near all-time highs of 1.93 million bpd in May.
By Alex Kimani for Oilprice.com
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More