Russian Output Reached 30-Year High Ahead of Meeting with Oil Producing Countries
Russian oil surpass the highest output in 30 years. The record showed an increase of 0.3% in its production and raising doubt on the meeting between oil producing countries to freeze production.
Members of the OPEC cartel and other oil producing countries will meet on April 17 in Doha. They will discuss the production cut in order to increase the global oil price. Prior to the published Russian oil output data, Iran already mentioned that it will boost oil production after sactions on the country's nuclear program is lifted.
Bloomberg reported that Deputy Crown Prince of Saudi Arabia Mohammed bin Salman Al Saud said in an interview with Bloomberg TV that if any country raises output, Saudi Arabia will also boost sales. Following his remark, oil price sank more than 4%.
With the continuous supply glut and oil price is in turbulence, leading oil producing countries have been searching for a solution. In February, Russia, Saudi Arabia, Venezuela and Qatar proposed an accord to cut the production which targeted to reduce a worldwide surplus and boost prices. Following the proposal, Brent price in London have increased 40% after hitting 12-year low in January.
However, recent data from Russian Energy Ministry showed that Russian oil output reached 46.149 million tonnes in March. An increase of 43.064 million tonnes in February. In term of barrel, the output in March is 10.91 million barrels compared to 10.88 million barrels per day in February.
Reuters reported that Russian Energy Minister Alexander Novak assured that March production would not be an obstacle to the expected agreement on a production freeze. Some industry observers said that Russian oil industry is dominated by big companies with their own agendas, therefore it will be difficult for Russia to maintain outpur freeze.
Nevertheless, major big Russian oil companies were reported to have reduced their output. Rosneft, the biggest oil producer, reduced its production by 0.7%, while Lukoil and Surgutneftegaz each have 0.1% reduction.
The main increase were in fact reported from the joint ventures between Russian and foreign companies. They are reported to raise the production by 11.9% to 1.16 million barrel per day, or equal to 4.92 million tonnes.
Market Analyst at London Capital Group Ipek Ozkardeskaya emailed comments to Market Watch, saying, "It appears that despite the financial difficulties on cheapening oil, Russia continues to fight with all its might. [The] April 17th meeting in Doha is now under the spotlight. Expecting a cut in production is clearly a dream, but even hopes to see the major oil producers freezing their [output] turns into an unrealistic expectation."
Russian oil production in March is reported to increase from 0.3% to 10.91 million barrels per day. This data raised concern on the agreement to freeze production between oil producers which will be discussed in Doha this month.