Russian Oil Cuts to End of Year

Russia announced its intent to extend 500,000 bpd production cuts till year end yesterday within minutes of the Opec+ commitment to voluntarily reduce its production targets by over 1mn bpd.

• The cut is made " from the average production level as assessed by the secondary sources for the month of February," Novak said in a statement.
• Novak has now announced two cut extensions since the first he made in February adding further uncertainty to Russia’s production commitments.
• On March 24, Novak said Russia was very close to reaching the targeted level of output, which he said would be 9.5 million bpd.
• Reuters reports last week suggested Russian oil production had only fallen by 300,000 bpd in the first three weeks of March, a report which supported crude.
• The move by OPEC+ and Russia to support prices makes the price cap harder to defend for the west, especially for ESPO grades which trade at a significant premium to Brent.