‘It will take quite a long time to reach the pre-crisis indices’
Russia’s oil output and exports showed two-digit fall in September
Like other key oil producers, Russia has to curb its output to keep prices at an acceptable level amid the pandemic. After six months of considerable cuts, the market is still far away from recovery, although some analysts cautiously make optimistic forecasts for the next year.
Russia’s oil production exceeded an OPEC+ quota in September, reports OilPrice.com. According to the country’s Ministry of Energy, Russia produced an average of 9,93 million bpd of crude oil and gas condensate last month. As some 700,000-800,000 bpd of Russia’s output is gas condensate, a type of light oil that is excluded from the global deal, Moscow only slightly surpassed its 9-million-bpd limit within the framework of the current OPEC+ agreement. September’s output was down by 11,8% year on year.
In the first nine months of 2020, the average production of oil and gas condensate amounted to 10,35 million bpd, a decrease of 7,8% compared to the corresponding period of 2019. A sharp decline in Russia’s oil output is a result of April’s OPEC+ agreement aimed to support falling oil prices.
“It is obvious that the structure of the energy sector will be transformed both from the point of view of demand and from the point of view of supply. Recovery will not be quick, and it will take quite a long time to reach the pre-crisis indices,” told Minister of Energy of Russia Alexander Novak his G20 counterparts at an online conference on 27 September. He outlined that all players in the global energy market needed to act together to tackle the effects of the pandemic on oil demand, which had slumped by as much as 10% this year.
The current development of the pandemic doesn’t give us much hope for a rapid price recovery. Cases continue to rise all across the world affecting both production and travel, so it’s unlikely that prices will rebound in the near future. Nonetheless, Goldman Sachs expects a price improvement next year. According to the investment bank, Brent crude may reach $65 per barrel in the third quarter of 2021 thanks to the availability of a coronavirus vaccine, which is expected next year. At the end of 2021, the bank’s analysts forecast a decline to $58 per barrel.
Meanwhile, exports of Russian oil to non-CIS countries totalled 167,44 million tonnes in January-September 2020, which is 10,2% lower than in the corresponding period of 2019. September’s result was by 21,5% lower compared to a year earlier. Exports to Belarus amounted to 8,66 million tonnes in the first nine months of 2020, which was a 34% decrease year on year.