Russia cuts oil production by 2.5 million barrels per day, starting in May 2020

Russian industry sources confirmed on Monday, April 20, 2020 that the Russian Energy Ministry asked local oil producers to reduce oil production by about 20% from the February 2020 average levels, which would bring Moscow in line with its commitment under its new agreement with OPEC, according to Reuters.

The OPEC + nations agreed to cut their oil production by 9.7 million barrels per day in May and June 2020, with the aim of absorbing surplus supplies due to the low demand that resulted from the Covid-19 virus crisis.

Under the agreement, Moscow should reduce production by 2.5 million barrels per day, starting in May 2020, using the reference production level of 11 million barrels per day, and the reduction includes only crude oil and excluding gas condensates.

Reuters sources confirmed that the Russian Energy Ministry asked oil producers last week to reduce their production from February levels by 19-20%, which would bring the level of oil production in Moscow in line with the objectives of the OPEC group agreement. In this context, Vagit Alekperov, head of the Russian company Lukoil, said that the company will reduce its production by 290 thousand barrels per day.

When adding the OPEC+ cuts to the cuts from other countries outside the alliance, including the United States and Norway, it is expected that the total decrease in global oil production will reach 20 million barrels per day, which is equivalent to one fifth of global oil production.