OPEC+. Reduced Oil Production Until End Of 2023

Higher prices are better than quantity. This is especially true for Russia that faces the so-called “oil price ceiling,” an integral part of Western anti-Russian sanctions, and cannot sharply increase oil exports. That’s one reason why Russia and Saudi Arabia, the world’s two largest oil producers and exporters, have announced that production cuts in their countries that already began this year will remain in force until at least the end of 2023.

The goal is to “prevent crude oil prices from falling”: after summer cuts, the price of oil in September rose to nearly $98 per barrel, then fell back to $80-$85 per barrel. On Monday, November 6, futures for December delivery were quoted at $81.31 per barrel for WTI crude oil and $85.65 per barrel for BRENT crude oil.

Saudi Arabia, the de facto leader of OPEC+, the international organization of oil-producing countries, has been cutting production since the beginning of the year, following a “preventative” strategy to maintain market stability and avoid further falls in oil prices. Therefore, Riyadh announced that until the end of 2023, it would maintain production at 9 million barrels per day, which is one million barrels per day less than the results recorded for the same period in 2022.

Russia will also follow the agreement with Saudi Arabia and voluntarily reduce the export of oil and petroleum products by a total of 300 thousand barrels per day, until the end of the year. As stated by Deputy Prime Minister of the Russian Federation in charge of energy sector Alexander Novak, further decisions will be made in December: “Until the end of December 2023, Russia will continue further voluntarily reduction of supplies of oil and petroleum products to world markets by 300 thousand barrels per day, which came into force in September and October 2023. Next month, the market will be analyzed to decide whether oil production should be further reduced or increased,” Novak said.

To compensate for any losses, Russia is increasing exports of other energy resources. In particular, India has become the world’s largest buyer of coal for Russia. In 2022, Indian importers increased purchases of Russian hard coal for both the power industry and metallurgy by more than 2.5 times compared to the previous year. The second place was taken by South Korea, which increased imports of Russian coal by 43%.