Russia already plans to increase oil exports ahead of a meeting with Saudi Arabia and other OPEC producers, the country’s July-September schedule shows, which coupled with increasing refinery runs suggests Moscow is gearing up to raise production, Reuters reports.
OPEC and non-OPEC producers are scheduled to meet on June 22-23 in Vienna to discuss a possible increase in output after more than a year and a half of coordinated cuts which have taken 1.8 million barrels per day (bpd) out of the market.
Those cuts, led by Saudi Arabia and Russia, having helped slash global oversupply and raised prices by almost $20 a barrel, but there are now calls, from Russia’s energy minister Alexander Novak and others, that the deal be re-examined. Under the deal among OPEC and non-OPEC producers, Russia agreed to cut production by 300,000 bpd compared to its output in October 2016.
According to Russia’s export schedule, crude exports and transit from Russia is expected to rise to 63.34 million tonnes in the July-September quarter from 62.45 million planned for April-June, It has exceeded its production quota for the last three months, however, pumping an average 10.97 million bpd in May – or around 20,000 bpd more than agreed, ministry data showed.
Russia could quickly add back at least 300,000 bpd of production, the ministry has said.
Russia’s Novak reiterated that OPEC should consider a 1.5 million-barrel-a-day increase to output quotas because the market is almost balanced.
High seasonal demand could translate into a supply deficit next quarter if OPEC and its allies don’t move to raise production, the minister said in Moscow. He added he had “no official information” that some countries would block a decision to boost output.
Russian analysts say Russia and Saudi Arabia will have difficulties persuading some OPEC members to raise production.
The decision to hike the output, if it is adopted, will inevitably become a compromise, since only some OPEC members can physically increase it, said Mikhail Altynov, Investment Director of IC “Peter Trust”.
Artem Malov, senior analyst of the Skolkovo Business School Energy Center is also inclined to compromise. He draws attention to the fact that previously, news that Russia and Saudi Arabia are considering an option to increase production by 1-1.5 million barrels per day forced oil prices to fall to $72.4, but after reports that a compromise option was being considered, they returned to around $74 for a barrel.