Russia’s Novak says no friction with OPEC+ over exceeding production quotas

Russian President Vladimir Putin’s oil point man said on Thursday that there was no friction with OPEC+ due to Russia exceeding crude production quotas and that the world’s second largest oil exporter would compensate for its overpumping.

Russia on Wednesday unexpectedly announced that itscrude oil production in June exceeded quotas set by the OPEC+ group but said that it would resolve the issue and stick to agreed output levels this month.

The news triggered speculation among some oil traders about tension between Saudi Arabia, the world’s biggest exporter which leads the Organization of the Petroleum Exporting Countries, and Russia.

Together OPEC and others including Russia, in a group known as OPEC+, have made a series of deep output cuts since late 2022.

Asked by reporters in Moscow if Arab members of the OPEC+ club were unhappy with Russia’s overproduction, Russian Deputy Prime Minister Alexander Novak said: “We have no friction.”

“What we are under-fulfilling is very meagre,” he added. “These are errors that will actually be eliminated, secured and obligations will be fulfilled.”

An industry source told Reuters that Novak held a call last week with Saudi officials, who expressed concern about Russia’s overproduction.

“I spoke with the minister (of Saudi Arabia) last week,” Novak said. He gave no further details.

Riyadh needs higher oil prices to balance its books.

Saudi Arabia’s economic growth will likely be one of the slowest among the Gulf Cooperation Council countries this year, according to a Reuters poll of economists, who lowered growth forecasts from three months ago due to extended oil output cuts.

Russia’s production figures are classified so it is unclear just how much Russia pumped in June – and why it needed to make a public statement about it if the overproduction was “meagre”.

According to industry sources data obtained by Reuters, Russia’s July crude oil export plan for itswestern ports is 1.7 million barrels per day (bpd) down from 2.1 millionin June, while refinery runs are seen at5.36 million bpd, upfrom 5.16 million bpd.

OPEC+
Under OPEC+ deals and voluntary cuts, Russia’s quota for June to September was 8.98 million bpd. According to the International Energy Agency, oil production in Russia in June fell to 9.22 million bpd from 9.24 million bpd in May.

OPEC estimates Russia’s oil production in June at 9.14 million bpd down by 114,000 bpd from May.

Novak said Russia was in constant touch with its OPEC+ partners and that he expected the OPEC+ joint ministerial monitoring committee (JMCC) meeting on Aug. 1 to be constructive.

“We always have constructive discussions,” Novak said.

“The general focus is to ensure the balancing of the market, the execution of agreements. We are in constant contact with our colleagues.”

The OPEC Secretariat on Wednesday saidKazakhstan, Iraq and Russia had submitted plans to make up for overproduction in the first six months of 2024 by curbing output each month through September 2025.

OPEC said cumulative overproduction in the six months between January and June was 1.184 million bpd for Iraq, 620,000 bpd for Kazakhstan and 480,000 bpd for Russia.

It laid out a schedule for monthly cuts for the three countries between July this year and September 2025 to offset the overproduction.

IRAQ
Iraq has repeatedly said it is committed to OPEC+ decisions and that it would compensate for overproduction. In February, Oil Minister Hayan Abdel-Ghani said Iraq was committed to producing no more than 4 million bpd.

But it produced between 4.189 and 4.217 million bpd between January and June, according to secondary sources used by OPEC to determine members’ production.

In March, the Iraqi oil ministry said it would reduce crude exports to 3.3 million bpd to compensate for exceeding its OPEC quota.

But Iraq shipped an average of 3.41 million bpd in April and 3.36 million bpd in May, according to oil ministry data and Reuters calculations.

AnOPEC+ online joint ministerial monitoring committee meeting on Aug. 1 will review the market.

Three sources told Reuters last week that the panel is unlikely to recommend changing the group’s output policy.
Source: Reuters (Reporting by Olesya Astakhova and Yousef Saba; editing by Guy Faulconbridge, Susan Fenton and Jason Neely)