Russia’s crude oil production
Russia is the largest crude oil producer in the world. On May 2, 2017, Russia’s Ministry of Energy reported that the country’s oil production fell by 50,000 bpd (barrels per day) to 11 MMbpd (million barrels per day) in April 2017—compared to the previous month. Now, Russia’s 100% compliant with major oil producers’ production cut deal. Brent crude oil (IXC) (IYE) (FXN) prices fell to a five-month low on May 2, 2017, despite the fall in Russia’s production. For more on crude oil prices and its drivers, read Part 1 of the series.
Russia’s crude oil production estimates in 2017
Russia’s crude oil production averaged ~11.0 MMbpd in 2016—the highest level in the last 30 years. Market surveys estimate that Russia’s crude oil production will rise by 170,000 bpd and average 11.14 MMbpd in 2017.
Russia and major oil producers’ deal
Russia and OPEC (Organization of the Petroleum Exporting Countries) are the key producers in major oil producers’ production cut deal in 1H17. OPEC’s next meeting will be on May 25, 2017. The meeting will be the driving force for oil this month. However, Russia hasn’t shown any interest in extending the production cut deal in 2H17. Its crude oil production usually falls in the first half of the year and ramps up in the second half of the year.
A Reuters poll estimates that Russia’s crude oil production will hit new highs in 2H17 after the production cut deal expires in June 2017. However, the possibility of an extension of the deal could support oil (XES) (USL) prices. Russia’s energy minister said that it’s too early to comment about extending the deal.
We’ll discuss how gasoline demand impacts crude oil prices in the next part of the series.