Russia’s government has instructed domestic oil companies to reduce production in the second quarter of 2024, ensuring compliance with its commitment to the OPEC+ production target of 9 million barrels per day (bpd) by June’s end. This directive comes on the heels of an announcement earlier this month by Deputy Prime Minister Alexander Novak, who pledged an additional cut of 471,000 bpd in coordination with members of the Organization of the Petroleum Exporting Countries and allied producers (OPEC+).
According to industry sources who spoke on condition of anonymity, the government has outlined specific production targets for each company, solidifying its resolve to uphold its OPEC+ obligations and contribute to the stabilization of international oil prices. The Ministry of Energy declined to comment on the matter, and Novak’s press office has yet to respond to requests for information.
Production Cuts Align with Refinery Maintenance Schedules
Industry insiders suggest that the mandated production cuts will coincide with the typical seasonal peak in refinery maintenance. Many refineries have already scaled back fuel production due to equipment outages and drone attacks believed to be linked to the ongoing conflict in Ukraine. In February 2022, Russia launched a military operation in Ukraine, a development that continues to cast a long shadow over global energy markets.
Official production figures for Russian oil remain undisclosed, with the government classifying vast swathes of energy data following the Ukraine conflict’s eruption. However, estimates based on industry sources and calculations by Reuters indicate that Russian oil production is likely to decline by around 3.6% in April, 4.1% in May, and 4.9% in June compared to March levels. This trajectory aligns with Russia’s commitment to voluntary production cuts.
It’s important to note that these figures exclude gas condensate, an ultra-light variety of oil, which accounted for roughly 1.3 million bpd in 2023.
Source: Reuters
