Russia has been caught overproducing its OPEC+ quota, but no one seems to be upset.
On Thursday, Russia’s Energy Ministry pledged to cut daily crude production in June by 971,000 bpd from the baseline of 9.949 million barrels. In April and May, Russia overproduced relative to its OPEC+ target, but now says it plans to comply strictly with its quota beginning this month.
Russian crude production averaged 9.39 million bpd in May, which was 3.8% above its agreed target of 9.049 million bpd.
Russia’s fuel exports have also increased as refineries come back online after being damaged by Ukrainian drone attacks.
Russian fuel exports in the week leading to June 9 rose by 10% to 3.53 million bpd.
Russia clearly needs the revenue to help pay for its Ukraine invasion and keep its budget ticking over, and the Saudis and OPEC are turning a blind eye.
This is easy to explain as OPEC’s May crude production rose by more than 60,000 bpd to 26.96 million bpd, a five-month high.
This does not include the 1.1 million barrels a day Angola was producing before it left OPEC in March (and is still producing). So, in effect, OPEC members have increased production to absorb Angola’s share.
Russia claims to be using more Chinese yuan in trade deals than US dollars, but you can bet that where it could, it would demand payment in greenbacks from foreign buyers.