Ukraine’s drone attacks on several refineries in Russia, which led to a decrease in production, plus the United States sanctions that “hit” the oil tankers of the Sovcomflot company, led to big headaches for the Kremlin.
Putin feels the ground is slipping from under his feet after money from oil exports begins to plummet, with him unexpectedly ordering Russian oil companies to cut crude production in the second quarter of 2024 to support high market prices worldwide.
The Russian government ordered companies to cut oil output in the second quarter to ensure they hit an output target of 9 million barrels per day (bpd) by the end of June, in line with its commitments to OPEC+, in especially with Arab producing countries, three industry sources said on Monday, according to Reuters.
Earlier this month, Russian Deputy Prime Minister Alexander Novak said Russia would cut its oil production and exports by another 471,000 barrels per day (bpd) in the second quarter, in coordination with some members of the Organization of the Petroleum Exporting Countries and allied producers from OPEC+.
Russia plans to gradually ease export cuts and focus only on reducing production. Novak did not provide a target level for output, but output would fall to nearly 9 million bpd in June if the cut is implemented as planned.
The sources, who declined to be named because they were not authorized to speak publicly, said the government had given specific targets to each company, indicating its intention to meet its OPEC+ pledge to cut output to support international oil prices .
The Russian Energy Ministry declined to comment. The news agency quoted sources as saying that the production cuts would facilitate a seasonal peak in maintenance at refineries, many of which have already cut fuel output as a result of disruptions and Ukrainian drone strikes.
Late last month, Novak said Russia’s oil production was 9.5 million bpd. Russian oil and gas production has fallen from an annual peak of 11.7 million bpd in 2019 to around 10.8 million in recent months as a result of coordinated actions with OPEC.
Russia has decided not to release crude oil production statistics because it has treated large amounts of data as classified after the start of what it calls a special military operation in Ukraine in February 2022.
