Update on Russian Oil Production (below quota) - Jan 25
Posted: Tue Jan 25, 2022 2:41 pm
Dude, Where’s My Oil? (And Why Is It So Expensive?): Julian Lee
Russia is among OPEC+ nations that have struggled to bring back oil production curtailed at the start of the pandemic.
Members of the OPEC+ alliance have faced a growing lack of spare capacity, a factor that could push oil prices higher through the rest of this year as global demand recovers.
(Bloomberg) -- Russia’s operating oil wells reached the
highest since OPEC and its allies joined forces, yet bringing
back production curtailed under the current deal remains
elusive.
Last month, Russia pumped oil from more than 155,600 wells,
according to Bloomberg calculations based on data from the
Energy Ministry’s CDU-TEK unit. That’s the country’s highest
number of active ones on a monthly basis since at least 2017,
when Moscow partnered with the Organization of Petroleum
Exporting Countries in coordinating output curbs to rebalance
the market.
Yet despite this surge in December, Russia’s crude output
that month dropped below its monthly OPEC+ quota for the first
time since the alliance enforced record coordinated cuts.
The figures show the challenge Russia faces in reviving oil
output after the deepest-ever curbs and reduced upstream
investment. Over the next six months, Moscow may only be able to
deliver about half of its scheduled increases in crude
production, according to analysts.
Surging Prices
Brent crude prices surged to a seven-year high last week
after the International Energy Agency said that markets look
tighter than previously thought. Analysts are increasingly
forecasting that the international oil benchmark will price into
the $90s, and potentially above $100 a barrel in the second half
of 2022 as supply tightens.
Russia expects to bring its oil production back to pre-
pandemic levels by April or May, provided that its OPEC+ quota
allows it to add 100,000 barrels a day every month, according to
Deputy Prime Minister Alexander Novak. However, a lack of growth
in Russia’s production in December and the absence of factors to
boost output in the short-term signals the target may take
longer to achieve.
“Russian crude production is likely to be unable to keep up
with these full quota increases, falling below the country’s
OPEC+ quotas as summer approaches,” analysts at BCS Global
Markets said. By July, the nation’s output may lag the quota by
about 240,000 barrels a day, the analysts said.
Russia is among OPEC+ nations that have struggled to bring back oil production curtailed at the start of the pandemic.
Members of the OPEC+ alliance have faced a growing lack of spare capacity, a factor that could push oil prices higher through the rest of this year as global demand recovers.
(Bloomberg) -- Russia’s operating oil wells reached the
highest since OPEC and its allies joined forces, yet bringing
back production curtailed under the current deal remains
elusive.
Last month, Russia pumped oil from more than 155,600 wells,
according to Bloomberg calculations based on data from the
Energy Ministry’s CDU-TEK unit. That’s the country’s highest
number of active ones on a monthly basis since at least 2017,
when Moscow partnered with the Organization of Petroleum
Exporting Countries in coordinating output curbs to rebalance
the market.
Yet despite this surge in December, Russia’s crude output
that month dropped below its monthly OPEC+ quota for the first
time since the alliance enforced record coordinated cuts.
The figures show the challenge Russia faces in reviving oil
output after the deepest-ever curbs and reduced upstream
investment. Over the next six months, Moscow may only be able to
deliver about half of its scheduled increases in crude
production, according to analysts.
Surging Prices
Brent crude prices surged to a seven-year high last week
after the International Energy Agency said that markets look
tighter than previously thought. Analysts are increasingly
forecasting that the international oil benchmark will price into
the $90s, and potentially above $100 a barrel in the second half
of 2022 as supply tightens.
Russia expects to bring its oil production back to pre-
pandemic levels by April or May, provided that its OPEC+ quota
allows it to add 100,000 barrels a day every month, according to
Deputy Prime Minister Alexander Novak. However, a lack of growth
in Russia’s production in December and the absence of factors to
boost output in the short-term signals the target may take
longer to achieve.
“Russian crude production is likely to be unable to keep up
with these full quota increases, falling below the country’s
OPEC+ quotas as summer approaches,” analysts at BCS Global
Markets said. By July, the nation’s output may lag the quota by
about 240,000 barrels a day, the analysts said.