The world’s largest oil producing countries, having signed another deal in December to maintain world oil prices, are now facing internal strife, finanz.ru reports.
Saudi Arabia, the largest member of OPEC in terms of extraction, and the only country in the world capable of rapidly upscaling or downscaling its oil extraction, believes that Russia’s efforts as part of the market stabilization agreement are inadequate.
By undertaking to reduce extraction by 228,000 barrels per day, Russia is acting too slowly, Saudi Energy Minister Khalid Al-Falih told CNBC in an interview.
According to the Russian energy ministry, in the first week of January, oil companies reduced production by 30,000 barrels per day compared to October last year, and will bring this figure to 50,000 barrels by the end of the month.
Russia was initially unwilling to cut extraction by more than 150,000 barrels per day. Now Moscow is acting “more slowly than would be desired”, Al-Falih emphasized.
The situation with Russia’s oil exports, which does not formally fall under the OPEC+ agreement, is nevertheless reminiscent of sabotage, the Saudi minister observed.
According to Platts, as early as December, Saudi Arabia cut back its oil shipments to the world market from 8.17 to 7.52 million barrels per day, and plans to reduce them further to 7.2 million in January – an 11% cut.
Russia, on the other hand, is reducing its exports by only 1% for the quarter, according to the Russian Energy Ministry’s shipment plan, as cited by Reuters.
The total export volume will drop from 63.8 to 61.7 million tons. Urals shipments through the Baltic Sea ports will decline by only 0.5%, from 19 to 18.9 million tons, and from 8.8 to 8.6 million tons through the Port of Novorossiysk.
Another 7.4 million tons will be sold through the far eastern Port of Kozmino, and 37.4 million tons will go to China as part of an intergovernmental agreement.
By the end of the fourth quarter, the total world overproduction of oil reached 1.6 million barrels per day, according to estimates by analysts from the Bank of America. In order to balance the market, they calculate that OPEC needs to cut back on extraction by an additional 30%.