To catch up with OPEC+ allies, Russia will focus on oil production cuts in Q2

Russia will drop oil production rather than exports in the second quarter of 2024 to ensure that all OPEC+ nations who lower output contribute equally to the cuts, according to the Russian Deputy Prime Minister. When OPEC+ members declared in early March that they intended to extend the cuts into the second quarter, Russia modified its production/export cut plan.

It stated that it would lower supply by 471,000 bpd in the second quarter through oil production and export cutbacks. In April, Russia will cut output by 350,000 bpd and exports by 121,000 bpd. In May, the 471,000 bpd decrease would include a 400,000-bpd fall in production and a 71,000-bpd reduction in exports, while in June, the Russian supply cut would be entirely due to production cutbacks.

The majority of the additional Russian supply cut will come from output cuts, which might result from lower refining capacity owing to maintenance in Q2 and refinery rates anticipated to have dropped due to Ukrainian drone assaults on Russian facilities. These attacks are thought to have reduced Russia’s crude processing capacity, and in the absence of extra storage capacity, Moscow is forced to restrict output.

According to calculations, drone strikes have taken 900,000 barrels per day of refining capacity offline, as reported by Reuters earlier this week. This includes Lukoil’s Norsi and Volgograd refineries, as well as Rosneft’s Kuibyshev and Ryazan refineries.

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