Reuters is reporting that the Russian Government is leaning towards leaving oil production at its current level when the OPEC+ group next meets.
Alexander Novak, Russia’s deputy prime minister and former energy minister, also recently said he does not anticipate further action from OPEC+, while Reuters quotes three sources who are familiar with the current mindset in Russia.
One of the factors is the $60 per barrel price cap imposed by Western countries to limit the revenue Russia can generate for its war in Ukraine. With Urals crude oil trading around $55, keeping it at this level will avoid going above the price cap and make it easier for Russia to sell its oil onto the global market.
The country has also already announced a cut of half a million barrels per day until the end of the year, and it may struggle to cut more according to one of Reuters’ sources:
“Russia is hardly coping with the promised production cuts, while it doesn’t need additional cuts in the current market environment.”
OPEC+ is a loose grouping composed of the 13 OPEC member countries plus another 11 non-member countries, most notably Russia. International oil companies like ExxonMobil and BP, the makers of the Mobil and Castrol lubricant ranges, are generally unaffected by OPEC+ decisions. Russia is one of the biggest producers in the group, but other members do not have a price cap to complicate their thinking, so they may well prefer to cut production to put some upward pressure on oil prices.