Russia and other major oil producers fail to reach agreement on oil production freeze

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/16

Last weekend, Russia and a number of other non-OPEC countries resumed talks with several OPEC members. In February, Russia and three OPEC producers agreed in principle to freeze their oil production at the January 2016 level if all OPEC countries went along with the deal. Some OPEC countries wanted to keep out while others were unwilling to accept that during the latest round of talks. Negotiations could resume in June.

Russian crude oil output was up in January-March by 4.5 % y-o-y to record levels. Under Russia’s interpretation of the proposed production freeze to January levels, it could increase oil output this year by 1.5‒2 %. The energy ministry just recently estimated that growth of output this year would only reach 0.5‒1 %, which is quite in line with the latest estimate of the International Energy Agency (IEA). However, Russia’s energy ministry expects Russian oil exports to increase 4‒6 % this year as domestic oil consumption falls.

Crude oil production in Russia, 2005‒2016
201616r2.png
Source: Rosstat.

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