Russia to cut oil output by 2.5 mbpd in May–June under OPEC+ deal

MOSCOW, Apr 13 (PRIME) -- Russia will reduce oil production by 2.5 million barrels per day in May–June out of the total cut of 9.7 million barrels per day agreed under the new OPEC+ deal, the Energy Ministry said in a statement on April 12 citing Minister Alexander Novak.

“Under the agreement, Russia will cut production by 2.5 million barrels per day out of the total of 9.7 million, the reduction base for Russia was set at 11 million barrels per day,” Novak said as quoted by the ministry.

The decision of the OPEC+ states to reduce production stemmed from a fall in global demand, which is currently seen at 20%, Novak also said.

“We have never had such a situation. Three years ago supply surpassed demand by 3 million barrels per day, and now we have it higher by 20 million barrels due to a fall in demand. That is why it is necessary to join forces of not only states, who participated in the deal earlier, but also other large producers including members of the G20,” he said.

The OPEC+ states said in a final official report that they will cut production by 9.7 million barrels per day in May–June, by 7.7 million barrels per day in July–December, and by 5.8 million barrels per day from January 2021 through April 2022.

The members will consider prolongation of the new deal in December 2021.

“The agreement is valid until April 30, 2022, but prolongation of the agreement will be revised in December 2021,” the document read.

Two sources with the OPEC+ delegation told PRIME that the members of the deal have decided to retain the basic level for production cut calculation at October 2018 for all the members including Mexico.

On April 9, the OPEC+ states agreed to reduce oil production by 23% from the basic level of October 2018 in May–June, by 18% in July–December, and by 14% in January 2021–May 2022. For Russia and Saudi Arabia, a special calculation base of 11 million barrels per day was set.

Dow Jones news agency said citing sources that Mexico plans to revise its position concerning oil cut production in two months after the deal. Mexico agreed to reduce the output by 100,000 barrels per day, and the U.S. will add a cut of 300,000 barrels per day to compensate for Mexico’s obligations.

End