April 08, 2019, 12:35 / Business / News

Dmitriev: The end of OPEC+ production restrictions does not mean the end of the deal

In June, OPEC+ may abandon the reduction in oil production in comparison with October 2018 and even begin to increase production, follows from the statement of RDIF General Director Kirill Dmitriev at the plenary session of the Russia – Arab World forum. “At the same time, this decision will not mean withdrawal from the deal,” he noted.

According to him, the decision will be joint; this is confirmed by the process of coordination between the participants. “Depending on the situation, it is important not only to jointly reduce production volumes, but also sometimes to increase them,” Dmitriev emphasized.

At the beginning of December 2019, the parties to the agreement between OPEC and non-OPEC countries agreed to reduce oil production by 1.2 million barrels per day for six months starting in 2019. Russia will reduce production by 228,000 barrels per day, but will fulfill its obligations by May this year. The average reduction in oil production in Russia in April compared to October is 200,000 barrels per day.

But not everyone believes that the agreement to cut production is a good idea - the agreement has become a strategic threat to the development of the Russian oil industry, Rosneft Chief Executive Officer Igor Sechin wrote to Russian President Vladimir Putin at the end of 2018. The share of Russian oil in the world market is falling, Sechin noted. In 1990 it was 16.3%, and now it is 12%, he specified. Since 2007, oil production in Russia has increased by only 10%, while in the United States, Brazil and Iraq - by 87, 50 and 111%, respectively. At the same time, consumers are reorienting from Russian oil to other types and restructuring supply chains.