Russia plans to bring its crude oil production to full compliance with the OPEC+ production cuts agreed last December, Energy Minister Alexander Novak said, as quoted by Reuters.
Novak also said the country’s production in August was 143,000 bpd below its October 2018 level. The October 2018 production level made the baseline for the OPEC+ cuts. However, earlier Novak had admitted that the August production level was higher, albeit slightly, than the production level Russia had agreed to maintain as part of its commitment to the OPEC+ cuts.
Russia pumped an average of 11.29 million bpd in August, which was not just higher than the cap it had agreed with OPEC but also the highest daily average since March. However, it’s worth noting here that the country was forced to cut more production than its quota earlier, after an oil contamination suspended the flow of oil via the Druzhba pipeline.
Yet Russia was not the only member of the pact that increased its oil production in August. A Bloomberg survey revealed OPEC also pumped more than it did in July, with the 200,000-bpd rise led by Nigeria and Saudi Arabia. The Kingdom had been cutting more than it had to almost since the start but, apparently, August marked a departure from this tactic.
An earlier survey, from Reuters, suggested a smaller increase in the cartel’s oil production in August, at 80,000 bpd from July, to a total 29.61 million bpd. This still represented an over 100-percent compliance rate for the group though it did not help prices much. What helped prices even less were the production increase reports that suggest OPEC may be reconsidering its price control strategy.
Meanwhile, OPEC’s share of the global oil market fell to the lowest in several years in August, to 30 percent, not least because of the production drops in sanction-bound Venezuela and Iran, but also because of the cartel-wide cuts.
By Irina Slav for Oilprice.com
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