OPEC+ Oil export cut blunted by surge in Russian shipments

OPEC’s efforts to deliver a substantial oil-output cut are being blunted by the group’s allies.

The Organization of Petroleum Exporting Countries slashed output by about 1 million barrels a day, according to a Bloomberg survey, roughly fulfilling their half of a cutback coordinated with the wider OPEC+ coalition. 

Group leader Saudi Arabia took considerable political heat from the US when it first announced the reduction, which has proven necessary to steady oil markets against deteriorating demand in China. 

Yet oil exports from the full 23-nation group dropped by just 361,000 barrels a day, as declines across most members were offset by a surge from Russia, data from energy analytics firm Kpler Ltd. shows. While exports and output aren’t perfectly correlated, the shipments can provide insight into a country’s oil production.

“Russian oil producers have been doing what counters the main narrative, namely they have been ramping up output,” said Viktor Katona, an analyst at Kpler in Vienna.

Moscow ramped up oil production to an eight-month high of 10.9 million barrels a day in November, Energy Ministry figures indicate, in advance of European Union sanctions on its crude sales coming into effect next week. Meanwhile, the Group of Seven nations is weighing a price cap on Russian crude, with the details still being worked out.

The OPEC+ alliance is due to meet on Sunday to review production policy for early 2023. While the Russian oil flood conflicts with the group’s bid to tighten supplies, the onset of sanctions means flows from Moscow may soon subside.