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Russia's Finally Starting To Cut Oil Production

Russia's crude oil production should fall 350,00 barrels per day from February 2023 levels, reaching 10.709 million bpd, Kpler analysts said on Thursday in a note, indicating that the country could be making good on its promise to cut 500,000 bpd.

Leading the production cut charge are Russia's state-owned companies, Kpler said, although exports are unlikely to drop.

Heading in the second half of the year, Russia's crude oil output could rebound to 10.83-10.85 million bpd, Kpler said, with higher demand coming out of China.

Russia's President Vladimir Putin said earlier this week that the country had decided to slash crude oil production in order to support global oil prices. Originally, the production cut was thought to last for a single month, but Putin later said that the cuts would run through the remainder of the year.

"All our actions, including those related to voluntary production cuts, are connected with the need to support a certain price environment on global markets in contact with our partners in OPEC+," President Putin said, adding that "We are reducing production, but nevertheless it is at the required level."

According to a person familiar with Russian Energy Ministry figures who spoke to Bloomberg, the country's March production cuts were down 700,000 bpd.

Russia originally stated the reason for the production cut was as a punishment for the price caps and EU import bans. Now, however, Russia is arguing that its production cuts are designed to support the oil market.

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Russia's 500,000 bpd promised cuts were to be taken off February as the baseline, making the total target production 10.1 million bpd. But according to Bloomberg sources, the Energy Ministry data shows Russia produced an average of 9.4 million barrels without condensate, or 10.36 million bpd with condensate. Russia's February production, including condensate, stood at 11.1 million bpd.

By Julianne Geiger for Oilprice.com

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