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25 Dec, 2020 09:24

Russia plans to boost oil production next year under OPEC+ agreement

Russia plans to boost oil production next year under OPEC+ agreement

Russia will support hiking production under the historic OPEC+ accord by 500,000 barrels a day in February if the market continues to stabilize, the deputy prime minister in charge of the energy sector, Alexander Novak, has said.

“If the situation stays normal and stable, we will support the increase,” Novak told reporters on Friday, adding that the parties to the agreement should gradually increase production to avoid jolting the market.

Russia is one of the leading members of the oil-producing coalition known as OPEC+, which comprises the members of the Organization of the Petroleum Exporting Countries and their allies. In April, the group agreed to cut crude production by a record 9.7 million barrels a day (bpd), or around 10 percent of global pre-crisis demand, in an attempt to boost the oil market, which was hit hard by the coronavirus pandemic. The limit was subsequently scaled back to 7.7 million bpd in August, and will be further eased at the beginning of 2021.

Despite the continuing turbulence and new border closures triggered by a new strain of the virus, OPEC+ members are set to increase daily output by 500,000 bpd in January, bringing the total production cut to 7.2 million bpd. However, it is still much less than the nearly two million bpd quota reduction scheduled to start in 2021 as per the initial agreement. 

The next OPEC+ summit is scheduled for January 4. The coalition is set to decide whether they should add a further 500,000 bpd to the market from February. After posting weekly gains for several weeks in a row amid vaccine hopes, crude futures retreated this week, amid concerns that the coronavirus mutation could crush fuel demand again. 

READ MORE: Russia looking to bolster oil supplies to India for decades ahead

Novak, who served for eight years as Russia’s energy minister before he was appointed as deputy prime minister, believes that the current situation is still much better, compared to second quarter forecasts. He added that the oil price of $45-55 per barrel would be enough to restore Russia’s oil production, which was down over eight percent this year.

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