Russia to Implement Summer Oil Production Cuts

Russia will implement additional crude oil production cuts during the warmer seasons to compensate for exceeding its OPEC+ quota in months past, according to sources familiar with the matter who spoke to Bloomberg. These cuts are planned for summer and early fall due to technological considerations, as Russia requires more oil for domestic use during the colder months.

As the largest crude producer within the OPEC+ alliance, Russia has struggled to adhere to the group's production agreements to stabilize global oil prices. In a recent commitment, Russia pledged to compensate for its overproduction since April, with compensatory measures extending through September 2025.

Historically, Russia has faced challenges in reducing production during late autumn and winter, citing the geological and climatic constraints of its oil fields. The upcoming cuts will focus on Western Siberian fields, which are more manageable for production regulation. These fields produce lower-quality oil compared to the premiumESPO crudefrom Eastern Siberia.

Despite missing the June 30 deadline to submit a compensation schedule to OPEC's secretariat, Russia plans to release the schedule soon. The Russian Energy Ministry has not provided comments on the matter.

In collaboration with other OPEC+ members, including Saudi Arabia, Russia has been undertaking voluntary production cuts. According to Bloomberg's calculations based on OPEC's monthly reports, Russia overproduced its quota by approximately 14.7 million barrels in the second quarter.

Russia's crude oil exports have already started to drop, with the levels in the four weeks to July 14 sinking to the lowest levels since January, at an average of around 3.11 million bpd. The drop in exports came as the country vowed to reach its oil production cut in June after exceeding it in May.

The effectiveness of Russia's production-cutting measures will be closely watched as the global demand for oil continues to fluctuate.

By Julianne Geiger for Oilprice

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