Novak: Voluntary Decision to Reduce Oil Production will be Reviewed Monthly
The voluntary cut in oil exports from Russia by 300,000 barrels per day will be extended until the end of December 2023. This was stated by Deputy Prime Minister Alexander Novak.
Thus, our country minimizes the risks of lower oil prices. According to the Deputy Prime Minister, the additional voluntary reduction in oil exports is aimed at strengthening the precautionary measures taken by the OPEC+ countries in order to maintain stability in the oil market.
After Novak’s statement, Brent oil prices at the moment rose above $91 per barrel.
Russia began voluntarily cutting oil supplies abroad in August by 500,000 bpd. The measure was extended to September, but the cut was reduced to 300,000 bpd. Now the reduction in exports has been extended until the end of the year.
Also, since March of this year, our country has been reducing oil production by 500,000 barrels per day. According to Novak, cited by the press service, now the voluntary decision to reduce oil production will be reviewed monthly. It is clarified that, depending on the situation on the world market, the possibility of deepening the reduction or increase in production may be considered.
Since May of this year, other OPEC+ countries have joined our production cuts. The total decline in production is now about 1.6 million barrels per day.
As a result, North Sea Brent has grown by more than 20% since the end of this spring and is now trading at about $90 per barrel. According to experts, for the OPEC+ countries, the optimal price is $80 per barrel or more.
Russian Urals oil, which at the beginning of the year was sold at a discount to Brent of $35-40, is now sold at a discount of $12.2 per barrel. At the same time, the price of Urals rose from $49.48 per barrel in January of this year to $74 in August, which is significantly higher than the price ceiling adopted for our oil by the EU, G7 and Australia. Other grades of Russian oil – ESPO, Sokol, Siberian Light and others – traditionally cost more than Urals.
The extension of the decline in exports until the end of the year, as well as the monthly revision of the volume of production cuts, may also be a reaction to US attempts to reduce world barrel prices. To do this, they have already resorted to market interventions from their strategic oil reserve, eased sanctions against Venezuelan oil exports, and are also negotiating to lift sanctions on Iranian oil exports.
