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Oil splashes in guesswork

16 May 2023

Kondratiev Sergey V. Principal Director on Economic Studies, Head of the Economic Department

Sergey Kondratiev, Principal Director on Economic Studies at the Institute for Energy and Finance, commented to Kommersant FM on oil production in Russia.

From the 1st, the OPEC+ countries, including Russia, should reduce the volumes. We are talking about the same 500 thousand barrels per day.

So far, this is not reflected in the statistics, but Moscow is unlikely to neglect this obligation, Sergey Kondratiev argues:

“There were countries that systematically violated the terms of OPEC +. This caused discontent among other parties to the agreement, but did not lead to its collapse or any drastic actions on the part of other countries.

But in the current conditions, it seems to me that Russia will still adhere to its obligations as much as possible, because under the current conditions, being in the OPEC+ club and being able to thus influence the global oil market is very important for it. We do not publish official statistics on production at the moment, but I believe both the OPEC+ Monitoring Committee and the parties to the agreement receive these data.

As for the prospects, as always, there are two factors. The first is, of course, the price of oil. Brent crude may not have been feeling very well. But with Urals, due to the reduction of the discount in recent weeks, the situation was better than in the market as a whole. I think that the decrease in the size of discounts will continue. We see this both in China and in India.

The second important factor is the exchange rate. If the Ministry of Finance returns to the market in the summer and starts buying them within the framework of the budget rule, then this, of course, will be a very serious factor for the weakening of the exchange rate. And de facto, this can lead to the fact that the ruble income of exporters will grow quite seriously.”

Kondratiev Sergey V. Principal Director on Economic Studies, Head of the Economic Department
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