Russian Deputy Prime Minister Alexander Novak attended a meeting between Russian President Vladimir Putin and King Hamad bin Isa Al Khalifa of Bahrain.
Novak addressed concerns on Thursday, stating there was no conflict with OPEC+ regarding Russia’s excess crude oil production. He assured that Russia, the world’s second-largest oil exporter, would compensate for the overproduction.
On Wednesday, Russia revealed that its June crude oil production exceeded OPEC+ quotas. However, it promised to adhere to the agreed output levels in the current month.
This announcement sparked speculation among oil traders about potential tension between Saudi Arabia, the leading member of OPEC, and Russia.
Since late 2022, OPEC and its allies, including Russia, known as OPEC+, have implemented significant output cuts.
When questioned about potential dissatisfaction from Arab OPEC+ members regarding Russia’s overproduction, Novak responded, “We have no friction.” He added that the overproduction was minor and would be corrected.
An industry source informed Reuters that Novak had a call last week with Saudi officials, who expressed concern over Russia’s overproduction. Novak confirmed the conversation but provided no additional details.
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Saudi Arabia requires higher oil prices to balance its budget. According to a Reuters poll, Saudi Arabia’s economic growth is expected to be one of the slowest among Gulf Cooperation Council countries this year due to extended oil output cuts.
Russia’s production figures are classified, making it unclear how much was pumped in June. Despite the public statement about overproduction being “meagre,” the precise figures remain undisclosed.
Industry sources reported that Russia’s July crude oil export plan for its western ports is set at 1.7 million barrels per day (bpd), down from 2.1 million bpd in June. Refinery runs are projected at 5.36 million bpd, up from 5.16 million bpd.
Under OPEC+ agreements and voluntary cuts, Russia’s quota for June to September was 8.98 million bpd. The International Energy Agency reported Russia’s oil production in June fell to 9.22 million bpd from 9.24 million bpd in May. OPEC estimated Russia’s June production at 9.14 million bpd, down by 114,000 bpd from May.
Novak stated that Russia is in constant communication with its OPEC+ partners and anticipates a constructive meeting of the OPEC+ joint ministerial monitoring committee (JMCC) on August 1.
“We always have constructive discussions,” Novak said. “The focus is on market balancing and agreement execution. We are in constant contact with our colleagues.”
OPEC announced on Wednesday that Kazakhstan, Iraq, and Russia submitted plans to compensate for overproduction in the first six months of 2024 by reducing output each month through September 2025.
The cumulative overproduction from January to June was 1.184 million bpd for Iraq, 620,000 bpd for Kazakhstan, and 480,000 bpd for Russia. OPEC outlined a schedule for monthly cuts for the three countries between July 2024 and September 2025 to offset the overproduction.
Iraq has reiterated its commitment to OPEC+ decisions and plans to compensate for overproduction. In February, Oil Minister Hayan Abdel-Ghani stated Iraq’s commitment to produce no more than 4 million bpd. However, Iraq’s production ranged between 4.189 and 4.217 million bpd from January to June, according to secondary sources.
In March, Iraq’s oil ministry announced a reduction in crude exports to 3.3 million bpd to compensate for exceeding its OPEC quota. Nonetheless, Iraq shipped an average of 3.41 million bpd in April and 3.36 million bpd in May, according to oil ministry data and Reuters calculations.
The OPEC+ joint ministerial monitoring committee will review the market in an online meeting on August 1. According to three sources, the panel is unlikely to recommend changes to the group’s output policy.