Russia will be flexible in its approach to voluntary oil production cuts

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the InfoTEK Internet portal on the disputes over the actual volumes of the voluntary reduction in oil production, which the Russian authorities announced at the end of February this year.

In the Western media, there is now quite an intense debate whether Russia is fulfilling its obligations to reduce oil production by 500,000 barrels per day. Bloomberg once again published a material in which it stated, citing its own data, that Russian oil exports by sea to international markets have increased by 10% since April to a new high.

Alexey Gromov noted that Bloomberg, on the one hand, has objective tanker tracking data. On the other hand, they should be treated with caution.

"They also contain mistakes, and they may not cover the entire volume of transportation of Russian oil. Also, their data on the supply of Russian oil through the Druzhba oil pipeline raise doubts, since in recent months the volumes have been declining, and it was in the spring, including along the southern branch," he said.

Gromov added that even if sea supplies are growing, these volumes will only partially compensate for the drop in exports via Druzhba.

It is also wrong to focus on trying to convict Russia of non-compliance with its obligations, the expert believes. According to him, no one demanded from the country to fulfill the declared volume of production cuts. At the moment, Russia on some days in April could reach the upper limit of the declared production cuts of 500 thousand barrels per day, on some days they could be less.

"Voluntary restrictions mean that Russia is further reducing. But no one obliged us to do this, this approach is wrong. We set a goal, and we will reduce production on a situational basis, which means flexibility in implementing this decision. If the market has the opportunity to sell a little more oil at good price - we will do it. If not, we will restrict production," the analyst said.

Now, OPEC + itself claims that Russia voluntarily cut production by 300-350 thousand barrels per day at the end of March. These estimates are close to the IEA data. Therefore, by the end of the month, Russia could well reach 500 thousand barrels per day, Gromov noted.