Russia will support 500,000 bpd oil output hike by Opec+ from February

Oil price of $45-$55 per barrel is suitable for output recovery, Energy Minister Alexander Novak says

Employees work at a storage facility for crude oil in the Indian state of Rajasthan. The slowdown in oil comes a week after significant gains, prompted by progress in vaccination rollouts across the gShow more

Russia expects to support an increase in oil production by the group, known as Opec+, of another 500,000 barrels per day (bpd) from February at next month’s summit of the leading global oil producers, Russian Deputy Prime Minister and Energy Minister Alexander Novak said.

Oil prices are trading above $50 per barrel, after coming under pressure this week from concerns new fast-spreading variants of the coronavirus will lead to reduced fuel demand.

In comments, Mr Novak also said that Moscow views an oil price between $45 and $55 per barrel as the optimum level to allow for recovery of its oil production, which has been significantly reduced as part of the Opec+ supply deal.

Russia, other leading oil producers and the Organisation of the Petroleum Exporting Countries, agreed to reduce output to support the global oil market as the Covid-19 pandemic has weakened fuel demand.

Since the agreement on a record global supply cut in April, Opec+ has progressively reduced the cuts and is expected in January to release an extra 500,000 bpd into the market.

The group holds its next online summit on January 4, when it is expected to discuss whether to release another 500,000 bpd in February.

“If the situation stays normal and stable, we will support this position [increase by 500,000 bpd],” Mr Novak told reporters at a briefing held in the government’s headquarters.

He said Russia supported a gradual production rise to avoid jolting the market. Opec+ had initially agreed to increase its production by 2 million bpd starting from January, but decided on a smaller increase at its meeting earlier this month.

Mr Novak said earlier this month the cumulative output increase by the Opec+ group will reach a planned 2 million bpd by April, barring any unforeseen events.

Opec+ agreed to cut its combined output by an unprecedented almost 10 million bpd, or 10 per cent of global pre-crisis demand, in April. Of that, Russia pledged to cut more than 2 million bpd.