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Due to the OPEC+ production cut deal and the decreased demand in the pandemic, Russia’s crude oil and condensate production fell in 2020 for the first time since the 2008 financial crisis and then slump in oil prices, according to government statistics.
Russia’s annualized oil production declined by 8.6 percent to 10.27 million barrels per day (bpd) in 2020, down from a record-high in 2019, data from the energy ministry cited by Russian news agency Interfax showed.
According to Reuters estimates, the 2020 oil production dropped for the first time year over year since the 2008 recession and was at its lowest level since 2011.
The decline in Russia’s oil production was not unexpected, considering the demand crash and the new pact that the OPEC+ alliance forged in April for steep proportionate production cuts. Russia and Saudi Arabia, the leaders of the OPEC+ pact, had to cut the most under the new agreement after failing in early March 2020 to initially find common ground on how to react to the oil price and oil demand collapse.
The drop in Russia’s oil production in 2020 comes after two consecutive years of production records in Russia’s post-Soviet history.
In 2019, crude oil and condensate production in Russia hit a record high for the post-Soviet era, despite Moscow’s key role in supporting the production cuts of the OPEC+ coalition. According to figures from Russia’s energy ministry, Russia pumped 11.25 million bpd of crude oil and condensate in 2019—up from 11.16 million bpd in 2018, which was the previous production record in Russia’s post-Soviet era.
As of January 2021, Russia should be boosting its production by 125,000 bpd after the OPEC+ group decided in December to ease the collective cut by 500,000 bpd.
The ministers of the group are meeting at the time of writing early on Monday to discuss the production policy in February, with Russia reportedly favoring another 500,000 bpd increase in the alliance’s production from next month.
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.