Russia is starting to reduce oil production by 500 thousand barrels per day from March. This was announced earlier by Deputy Prime Minister of Russia Alexander Novak. According to him, the decision was voluntary, without consulting with the OPEC+ countries.
Novak's representative explained that the reduction would affect only oil, excluding gas condensate. The production quota will be distributed evenly among oil companies depending on their production levels.
A TASS source in the industry specified that the reduction in production would be calculated from the real production level, not from Russia's quota within the framework of the OPEC+ deal. According to the deal, from November 2022, Russia's oil production is set at 10.478 million bpd. In January 2023, as Novak said earlier, Russia produced about 9.8-9.9 million bpd.
Ronald Smith, senior analyst at BCS World of Investments, said Russia's decision could push up both international oil quotations and the price of Russian Urals crude. This, in turn, could have a positive effect on the revenues of Russian oil companies and the budget.
In his opinion, reducing the supply of Russian oil on the world market for those consumers who are willing to buy it, can reduce the discount on Urals, as well as facilitate the demand for services for the transportation of oil by sea.
Novak noted that Russia's decision to voluntarily reduce oil production has so far been taken only for March. Extension of this measure to a later date will be decided on the basis of the situation. Head of Gazprom Neft Alexander Dyukov reported that this measure will balance the market, which is currently in surplus.
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Based on materials from TASS