Russia Agrees On Further Oil Export Cuts, Will Reveal Deal Parameters Next Week

By Julianne Geiger of Oilprice.com

Russia will disclose the details of the deal with OPEC+ next week, Russian Deputy Prime Minister Alexander Novak told President Vladimir Putin on Thursday, according to Reuters.

Novak did not specify exactly which details would be disclosed.

Putin asked Novak at a televised government meeting if he had reached an agreement with OPEC+ to reduce oil supply. It was not immediately clear whether the deal involves production cuts, export cuts, or both.

“We have agreed, but we will announce the main parameters next week, publicly,” Novak replied.

The current deal Russia has with OPEC+ would see the country’s oil exports cut by 500,000 bpd. On top of this, Moscow has also promised to reduce its oil exports in August by another 500,000 bpd and to cut September shipments by 300,000 bpd.

The oil output cuts in Russia have been holding back its top producer Rosneft from fully realizing its potential, the chief executive of the state-controlled oil giant, Igor Sechin, said just one day earlier, on Wednesday.

“I should note that Rosneft has been limiting crude oil production in one way or another since 2017, which prevents the Company from fully unleashing its potential,” Sechin said in a statement discussing Rosneft’s first-half performance. Sechin has voiced repeated arguments against the production cut deal with OPEC+. In June this year, Sechin said that Russia is exporting a smaller share of its oil output, losing market share compared to other OPEC+ members. Some OPEC+ members are exporting up to 90% of their oil output while for Russia, the share is around 50% of the total, according to Rosneft’s top executive.

Bloomberg has, however, named Russia the victor in the oil production cuts, reducing production even more starting in July, while Saudi Arabia, for example, started making extra cuts in May.