Russia orders oil output reduction to meet OPEC+ target, boosting global prices

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In a move to fulfill its commitment to OPEC+ and support international oil prices, the Russian government has directed companies to decrease oil production in the second quarter. This decision comes after Deputy Prime Minister Alexander Novak announced earlier this month that Russia would cut its oil output and exports by an additional 471,000 barrels per day (bpd) in coordination with OPEC+ members.

According to industry sources, the government has set specific targets for each company to ensure a collective output of 9 million bpd by the end of June. This reduction would be a significant step towards meeting Russia’s OPEC+ pledge.

The production cuts are expected to coincide with a seasonal peak in refinery maintenance, which has already been impacted by outages and Ukrainian drone attacks. As a result, fuel production has decreased in recent months.

Novak stated that Russian oil output was 9.5 million bpd late last month. Production, including gas condensate, has declined from a peak of 11.7 million bpd in 2019 to around 10.8 million bpd in recent months due to coordinated efforts with OPEC.

The planned reductions indicate a 3.6% drop in April, 4.1% in May, and 4.9% in June from March levels. Novak specified that Russia would reduce output by an additional 350,000 bpd in April and by 400,000 bpd in May. In June, all the cuts will be from oil output, with exports also being reduced.

These measures are expected to support global oil prices, which have been volatile due to geopolitical tensions and supply disruptions. Russia’s commitment to reducing output demonstrates its willingness to cooperate with OPEC+ to stabilize the oil market.

(Source: Forex News | Reuters)

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