Russia will discuss reducing oil production by 14% – in proportion to the share in total production of countries that will agree to stabilize prices. The deal may include the United States, Mexico, Norway, Canada, and others with a total production of 70 million barrels in the day.
Russia expects that countries that produce 70 million barrels in total will join the new deal to reduce oil production per day. In addition to OPEC and Russia, which for three years reduced oil production until April 1, 2020, when the previous agreement on OPEC + production cuts expired, these are the United States, Brazil, Norway, Canada, Mexico, and others. This was told to Free News by a source close to the Russian Ministry of energy, and confirmed by a representative of the Department.
In this case, Russia can reduce production by about 1.6 million barrels, or 14% from the level of the first quarter (11.3 million barrels per day, according to the Central Department of fuel and energy), follows from the words of a source close to the Ministry of Energy. “The country is ready to cut production in proportion to its share in total production, and taking into account the joint reduction of 10 million barrels per day,” he claims. A representative of the Ministry of Energy confirmed this.
OPEC+ members and other oil-producing countries will begin negotiations on a new joint reduction in oil production on Thursday, April 9.
The largest OPEC member, Saudi Arabia, demanded that Russia reduce production by more than 1.5 million barrels per day, a source close to the Kremlin told. But he didn’t give an exact figure. Bloomberg reported on April 4, citing its sources, that the Russian authorities may approve a reduction in production in the country by only 1 million barrels per day or about 10%. Option with a reduction of 1.5 million barrels on the day that the other participants in the negotiations insist on, “the Kremlin may not like it,” one of the Agency’s interlocutors noted.
The Ministry of Energy expects that the main condition of the future deal will be fulfilled: the leading producing countries-Russia and Saudi Arabia-will be joined by the United States, which in 2019 became the leader in oil production in the world (currently producing about 13 million barrels. per day). The States will also reduce production in proportion to their share in total production of 70 million barrels per day.
It was US President Donald Trump who mediated between Moscow and Riyadh so that after the collapse of the OPEC+ deal, they sat down again at the negotiating table and discussed the condition for a new production cut. After that, at a meeting with the heads of Russian oil companies last week, President Vladimir Putin said that Russia is ready to reduce production together with OPEC+ and the United States.
Companies in Texas, a key American oil state, have already announced their desire to reduce production, but Trump has not yet explicitly said that the US will join the overall production cut. At the same time, the US Department of Energy lowered its production forecast for 2020 by 1.4 million barrels, to 11.8 million barrels per day, in 2021, the decrease will be another 0.7 million barrels per day.
The US will naturally reduce production by at least 4 million barrels per day for three months, wrote on Wednesday, April 8, on his Twitter page, the head of the regulator of the state of Texas (responsible for the development of oil fields in the largest oil-producing state of the United States), Ryan Sitton. “I do not participate in tomorrow’s OPEC+ conference call, but if I did, I would say that we need to reduce production by at least 20 million barrels, and the US will reduce production by at least 4 million barrels in the next three months, organically (naturally),” he said. According to Sitton, if nothing is done, the storage facilities will be filled within two months, as a result, the world will have to reduce production by at least 30 million barrels.