Russia plans to prolong oil production cuts for the sake of Saudi Arabia, ‘Kommersant’ reports
At the upcoming June meeting of the OPEC+ countries, Russia is planning to propose prolonging the reduced oil production levels set for May–July 2020, Kommersant reports, citing sources in the industry.
The OPEC+ group reached a decision on reducing oil production during its last meeting in April. Under the terms of the agreement, Russia dropped its oil production down to 8.5 million barrels per day for the period of May–July. According to Kommersant, the Russian Energy Ministry is discussing maintaining this quota for an additional two months.
In May, Saudi Arabia decided to further restrict oil production, beyond the limits set by the OPEC+ agreement. According to Kommersant, it can be assumed that Riyadh “will require new concessions from Russia in exchange.”
The Russian Federation’s position on tightening [production quotas] is linked to pressure from its key partner under the agreement with Saudi Arabia, which is unhappy with the current level of oil prices, despite the fact that demand has begun to recover in connection with the lifting of restrictions due to the coronavirus.
From May to July 2020, OPEC+ member countries agreed to reduce global oil production by 9.7 million barrels per day, in an attempt to stabilize plunging oil prices. The decline in production will then transition to 8 million barrels per day until the end of 2020, and reach a reduction of six million barrels per day by May 2021.