Russia increased oil production to historic highs

Oil production returned to the level of October 2016 and approached 11.2 million barrels per day.
Russian oil companies began to increase production sharply in July after the OPEC agreement agreed at the end of June to increase the supply of oil to the market. Now, oil production in Russia has almost reached the historically high level of 11.2 million barrels per day, which is only 50,000 b / d less than in October 2016, which served as the basis for the agreement between the Russian Federation and OPEC countries to cut production. As part of the adjustment of the deal, OPEC + Russia will increase production by 200 thousand b / c, as a result, in 2018 its production will be about 550 million tons.

Russia is rapidly increasing oil production, using the relaxations within the OPEC + deal. According to Reuters, the average daily oil production in Russia amounted to 11.193 million b / s, almost reaching the level of October 2016 (11.247 million b / s), from which the level of reduction in the OPEC + deal is measured. In 2016, Russia promised to cut production by 300 thousand b / d relative to October 2016. The gradual withdrawal of Russia from the deal began in April, when the quota of 10.9 million b / s for the first time was exceeded by 280 thousand b / s, the agreement was fulfilled by 93%. At the same time, the goal of the agreement was fulfilled - world oil reserves fell to 2.81 billion barrels (data on the OECD). Since that time, Russia has been increasing oil production, despite the OPEC + pact, against a background of falling production in Venezuela and growing consumption. The Energy Ministry declined to comment.

The OPEC + deal is valid until 2018. Coordinated its adjustment was at the end of June. At the meeting in Vienna, the OPEC + countries agreed in the second half of the year to increase production by 1 million b / s compared to the current level. The largest increase in production will be assumed by Russia and Saudi Arabia, which most actively promoted the completion of the agreement. The hardest version of the new deal, supported by the Russian Federation, assumed production growth of 1.5 million barrels per day, but in the end was not adopted because of the position of Iran and Venezuela.

The country's quota in the new deal could amount to about 200 thousand b / s, oil companies will increase production proportionally to their share in the reduction in July, last month the head of the Ministry of Energy Alexander Novak said. According to him, as a result, in 2018 Russian production will approach 550 million tons. According to the Ministry of Economy, it will grow by 0.5%, to 549 million tons, reaching a peak of 560 million tons in 2020-2021. Further, oil production in Russia will decrease to 555 million tons by 2024, the department believes.
The recent decision of OPEC + will not have a significant impact on oil prices in the coming years: the Ministry of Economy pawns a price of $ 63.4 per barrel in 2019 with a decrease to $ 53.5 by 2025.

After the decision of OPEC + the price for oil increased from $ 75 to $ 78 per barrel by July. One of the threats to price stability is the buildup of shale production in the United States. As of the end of June, over the week, the United States kept daily production at 10.9 million b / d, while oil reserves grew by 0.3% to 417.9 million barrels.

"Despite the fact that in 2018, the growth rate of liquid hydrocarbon production in the US will be higher than the growth rate of world oil demand, on average there will not be an excess of supply in a year," experts at Vygon Consulting believe. "In this regard, attempts to limit production growth oil in the US should not be the primary goal of OPEC +, but the potential for growth in their production should be taken into account when making a decision to change quotas. "