Russia To Keep Oil Cuts Until June

Russia has decided to keep its oil production at a reduced level through June, taking into account the current market situation, according to Deputy Prime Minister Alexander Novak.

The country last month pledged to reduce its crude-only output by 500,000 barrels per day in March in response to western energy sanctions. It’s currently close to making this planned cut and will achieve the targeted output level within days, Novak said in a statement, without providing any further details. 

There has been skepticism over whether Russia has made the intended cuts so far this month, as the nation’s seaborne crude exports have been resilient despite sanctions. Domestic refinery runs have also shown little sign of output reductions. 

Russia’s decision to extend the period of oil-output cuts comes on the heels of a banking crisis that has rattled commodity markets. While regulators and central banks stepped in to try and restore investors’ confidence, oil prices are hovering around 15-month lows.

Novak said his country won’t accept any external restrictions, which create “significant risks for the energy security of the whole world,” in reference to western price caps on the nation’s crude oil and products. 

Russia’s pledged cut is equivalent to around 5% of its total crude oil and condensate output in January, which was taken as the baseline for the reductions. The country’s producers pumped around 10.86 million barrels a day in the first month of the year, according to Bloomberg calculations based on industry data.

Russia’s oil output data has been classified since last year, with the market only occasionally getting a glimpse of the actual production levels.