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Oil demand in Russia stabilizes after initial war shock

Russian oil production is expected to exceed 480 million tons this year, in line with the 500,000 barrels per day reduction decided by Russia. Russia's decision to cut production could have a significant impact on the global oil market.

energynews
Le 25 April 2023

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Russia ‘s oil production is expected to exceed 480 million tons this year, or about 9.6 million barrels per day (bpd), according to a knowledgeable Russian government source.

Russia’s combined oil and gas condensate production exceeds OPEC quotas+.

The figure is in line with Russia’s commitment to cut production by 500,000 bpd to 9.5 million bpd from March until the end of the year. The source said that if the current trend continues, production for the entire year will reach 480 million tons. The Russian Ministry of Energy has not yet commented on this issue.

In 2022, Russia’s combined oil and gas condensate production reached 535 million tons, or 10.7 million bpd, with condensate excluded from the production quotas used by the OPEC+ producer group for Russia.

However, this year’s production could reach about 520 million tons or 10.4 million bpd, taking into account 40 million tons of condensate gas, the source said. Official forecasts had projected Russia’s oil and gas condensate production for 2023 to be between 490 and 500 million tons (9.8 to 10 million bpd).

Russia’s decision to cut production could have a significant impact on the global oil market

Oil demand in Russia has stabilized after suffering an initial shock at the start of the war, according to analysts at J.P. Morgan. They also estimated that Russia’s overall production, including crude and condensate, was 10.8 million bpd in March, down 250,000 bpd from February.

Russia’s oil production declined in April 2022 after the West imposed sanctions due to the country’s military operation in Ukraine. Despite this setback, Russia has managed to successfully sell its oil to China and India. Nevertheless, Moscow has decided to cut crude oil production by 500,000 bpd until the end of the year to support the price of oil, which is the main source of income for the Russian economy.

The lack of transparent official data from one of the world’s largest oil producers makes it more difficult to monitor global supply and analyze markets, according to analysts at J.P. Morgan in a research note. Russia’s decision to cut production could have a significant impact on the global oil market, and it remains to be seen how this will affect prices and supply in the coming months.

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