Russia pumped 11.09 million barrels of oil daily in the first week of June, Interfax reported Saturday, citing an unnamed industry source. This is 143,000 bpd above the country’s quota under the OPEC+ production cut deal, and only about 100,000 bpd below the record-breaking production rate in November 2016, which Russia took as basis for its cuts.
Data from the Energy Ministry shows that Russia has been exceeding its quota for three months in a row as of end-May, at 10.97 million bpd. In the beginning of June, the most marked increase came from Rosneft.
The country’s top oil producer said earlier this month it had upped production by 70,000 bpd over just two days and could quickly ramp up by 100,000 bpd. Rosneft has a spare production capacity of 120,000-150,000 bpd.
Gazprom Neft also said recently that it is ready to start ramping up, recovering production to pre-deal levels within a month or two by adding 5,000 bpd.
Russia’s oil companies have made it clear they would rather pump more than seek to benefit from higher oil prices as a result of the production cuts.
The news of the higher June production weighed on prices as it came out on the heels of the latest Baker Hughes rig count report, which showed that the number of active rigs in the United States rose for the third week in a row. Rigs, S&P Platts noted, have been rising for 13 of the last 18 weeks. Related: The Real Reason For Higher Gas Prices
Meanwhile, the market is eagerly awaiting OPEC and Russia’s meeting on June 22, when the partners will discuss the future of the production cut deal after it became clear that $80 per barrel does not make the largest oil consumers in the world—or Russia and Iran, for that matter—happy. Many expect the meeting to end with a decision to gradually raise production, although some observers note it will be a tough decision to make due to different opinions within OPEC.
By Irina Slav for Oilprice.com
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