MOSCOW: Russia will cut oil production by almost half a million barrels per day (bpd) in the second quarter of 2024, the government said Sunday, as part of a move to boost prices amidst ongoing economic uncertainties.
The decision builds upon previous efforts to curtail both oil output and exports. These measures reflect the concerted efforts of major energy producers to drive up market rates amid global economic challenges.
Deputy Prime Minister Alexander Novak outlined the specifics of the plan, stating that Russia would decrease its output by 350,000 bpd in April, followed by reductions of 400,000 bpd in May, and a further cut of 471,000 bpd in June. Novak emphasized that these additional cuts would be gradually reversed based on market conditions following the conclusion of the second quarter.
In a statement published by the Russian government, Novak underscored the importance of maintaining market stability, especially given Russia’s heavy reliance on revenue from oil and gas exports.
Decline in Russia’s Energy Export to Europe
The move comes amid Western sanctions targeting Moscow’s energy sector in response to Russia’s actions in Ukraine, prompting the country to seek alternative markets such as China and India. Europe, historically a major energy client for Russia, has seen a decline in Russian energy exports due to these sanctions.
Russia had previously committed to reducing production by 500,000 bpd last year, with the agreement extending until the end of 2024.
In addition to production cuts, Russia also agreed to limit its export volumes, with reductions of 121,000 bpd in April and 71,000 bpd in May compared to average sales in the same months last year. Novak noted that these voluntary reductions aim to support the precautionary measures adopted by OPEC+ countries to maintain stability and balance in oil markets.
