Russia will be cutting oil production instead of exports in the second quarter of 2024 so that all OPEC+ producers that reduce output contribute equally to the cuts, Russian Deputy Prime Minister Alexander Novak said on Friday.
“This is a move to ensure an equal contribution of all countries to the production cuts,” Novak was quoted as saying by Russian news agency Interfax.
“The moment has come when we are reducing production instead of exports,” Russia’s top oil official added.
When the OPEC+ members announced in early March their intentions to extend the cuts into the second quarter, Russia changed its production/export cut plan and said that it in the second quarter it would reduce supply by 471,000 bpd in the form of cuts to oil production and exports. In April, Russia will reduce production by 350,000 bpd and exports by 121,000 bpd. In May, the 471,000 bpd reduction would be in the form of a 400,000-bpd cut to production and 71,000 bpd cut to exports, and in June the Russian supply cut would be 471,000 bpd entirely from production reductions.
Output cuts will be most of the extra Russian supply cut, and they could be the result of reduced refining capacity with maintenance coming in Q2 and refinery rates estimated to have slumped due to Ukrainian drone attacks on Russian refineries. These attacks are estimated to have cut Russia’s crude processing capacity and, in the absence of spare storage capacity, Moscow needs to cut output.
According to Reuters estimates, the amount of Russian oil refining capacity that has been taken offline due to Ukrainian drone strikes is 14% of the total refining capacity.
Calculations show that 900,000 barrels per day of refining capacity have been taken offline by drone strikes, Reuters reportedearlier in the week. This includes Lukoil’s Norsi and Volgograd refineries, and Rosneft’s Kuibyshev and Ryazan refineries, among others.