Russia to surpass Saudi Arabia as top OPEC+ oil producer
The IEA says deep production cuts from the Gulf kingdom will leave it trailing behind Moscow in July and August
Russia is about to surpass Saudi Arabia as the largest OPEC+ oil producer, with the kingdom launching a unilateral cut of 1 million barrels per day (bpd) after pledging to pump around 9 million bpd in July and August—the lowest level in two years.
"The Kingdom’s crude output is set to plunge to a two-year low of around nine mb/d in July and August, leaving it trailing behind Russia as the bloc’s top crude producer,” the Paris-based International Energy Agency (IEA) said in its Oil Market Report last week.
Saudi oil production of just 9 million bpd would be the lowest level the world’s top crude oil exporter has pumped since 2011, excluding deep production cuts implemented during the peak of the COVID-19 crisis.
Earlier this month, Saudi Arabia announced extending a voluntary production output cut of 1 million bpd for another month to include August. Russia simultaneously announced a 500,000 bpd reduction in exports next month.
The voluntary cut comes on top of a two-million bpd cut implemented last year by all OPEC+ members.
“This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil market,” the Saudi energy ministry said on 3 July.
OPEC+ has been reducing production as a precautionary measure to support stability in oil markets due to the turmoil caused by western sanctions on Russia’s energy sector.
Furthermore, Saudi Arabia has been significantly boosting its imports of Russian fuel oil, reaching 2.86 million metric tons for the first half of 2023 – a figure far exceeding the 1.63 million metric tons imported for all of 2022.
In May, Bloomberg reported, “Saudi Arabia is snapping up millions of barrels of Russian diesel that Europe no longer allows, while simultaneously sending its supplies back to buyers in the EU."
Traders and analysts believe the kingdom has been conducting this scheme to generate higher profits by taking advantage of western sanctions.