The decision to reduce oil production in Russia

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Rambler/Finance on the decision of the Russian government to reduce oil production by 500 thousand barrels per day starting from March 2023:

"We are talking about a natural decline in production due to reducштп demand for petroleum products. After the embargo, which came into force on February 5, Russian companies, according to most estimates, will not be able to find a replacement for a significant volume of petroleum products exports, primarily diesel fuel, in the next few months. And the average estimates fluctuate just around 500 thousand barrels per day.

Despite the fact that crude oil exports, as data for January and early February show, are quite stable and remain at a high level, due to a reduction in the supply of petroleum products export, a decrease in primary oil refining will inevitably occur. Accordingly, in March-April, this will affect production."

The expert expressed the opinion that by reducing oil production, the Russian government is "acting ahead of the curve."

"In this case, they are trying to present a decline in production associated with demand problems as a targeted measure to balance the market," the expert noted.

He added that the reduction of oil production in Russia by 500 thousand barrels per day is already included in the available forecasts of foreign analysts.