Energy, Europe, Geopolitics, News, Oil

Market Update: Russia to Boost Oil Production in 2018 Despite OPEC Output Deal

Russian Energy Minister Alexander Novak said earlier this week that Russia would boost its oil production next year even if the global deal to cut production led by the OPEC would be extended beyond March. The country is looking at increase by 3.5-4.0 million. “We forecast that in 2018 we will have small growth relative to the year 2017, but it will to a large extent depend on what decisions are taken on extending or not extending the [deal] with OPEC nations,” Mr. Novak said. “We will now make our forecasts within a range of a possible increase from today’s level, if there is no [extended] deal [with OPEC],” he added.

In November, Russia’s crude oil production stood at 10.91 million bpd, which is the lowest level for this year as maintenance of some field affected output. The daily oil production in September 2017 was down by 3 percent compared to the October 2016 levels, which OPEC and non-OPEC producers had used as the baseline for the cuts. Participating producers agreed to reduce output by 1.8 million bpd until March 2018.

OPEC and some non-OPEC countries, most notably Russia, entered into the joint agreement to tame a very high level of output in order to prop up crude prices. In the last quarter of last year, Russia’s production hit a post-Soviet era high. In 2016, output had grown to 10.96 million bpd from 10.72 million bpd in 2015. Moscow promised in the deal to curb its output by 300,000 bpd from the October 2016 level, which was the highest in nearly three decades.

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