Russia is no longer cheating Saudi, but it may be forced not to hit oil foundations

, 19:06, 12.09.2023
Estimated reading time: 2 minutes

Russia's maritime exports of oil in September were below the limit set by the agreement with Saudi Arabia under the OPEC+ oil agreement, but it may soon exceed it if it does not want to hit the founda

Russia is no longer cheating Saudi, but it may be forced not to hit oil foundations

"Kommersant" found that Russia shipped 3.34 million barrels of oil per day by sea in September, which is less than the 3.4 million needed to achieve the target of reducing exports by 300,000 barrels agreed with Saudi, which is reduced by one million barrels per day.

Saudi and Russia agreed in the past that the Russians would reduce exports by 500,000, but they failed to do so, sparking a dispute between these oil powers, which are the largest producers of the OPEC+ oil agreement. It assumes a coordinated reduction in production in oil countries in order to increase the price of oil on the market. This ranges around $90 per barrel of Brent.

Russia will cut off oil production. The effect of Western sanctions

According to "Kommersant", the Russians may nevertheless be forced to increase oil exports by sea above the limit agreed with Saudi due to the uncertainty regarding refinery renovations. If these are prolonged, Russia will have to export oil instead of to them and will increase it beyond the plan agreed with Saudi, and therefore will not fulfill the agreement.

The alternative is a reduction in production, not exports, which is equally harmful because it affects the foundations of Russia's revenues. Once a deposit is closed, it cannot always be exploited again.

Oil exports from Russia are increasing compared to June, when they recorded a minimum of 3.1 million barrels per day due to arrangements with Saudi Arabia. Now it is increasing but still below the limit. Meanwhile, the OPEC+ oil agreement and the Russia-Saudi agreement allowed Russians to replenish the reserves of the National Wealth Fund fueled by petrodollars and return to the budget deficit plan of two percent of GDP.

The problem, however, is that the increase in revenues resulted mainly from the depreciation of the ruble, which is experiencing a crisis in value compared to the dollar, which now costs almost one hundred pieces of the Russian currency.


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