Russia says its oil output may drop as much as 17% this year

Russia’s oil production this year may drop by as much as 17% amid international restrictions on buying the nation’s crude, said Finance Minster Anton Siluanov. 

“The output will decline. By what amount? 17%, a bit more or a bit less, that’s possible,” Siluanov told reporters at a briefing on Wednesday. He didn’t specify whether he was talking about a drop from production levels at the start of the year, or comparing annual averages.

The exact volumes will depend on foreign appetite for Russia’s barrels. Siluanov said. “We don’t know now which countries will refuse them and which won’t,” he said, adding that Russia will work to redirect its flows to markets still interested in buying its oil.

Russia’s oil industry has been under severe pressure since the invasion of Ukraine as western nations and their allies seek to stop the Kremlin’s military aggression by curbing key sources of revenue. While only the U.S. and the U.K. have banned purchases of oil and petroleum products from the country, many other buyers have been looking elsewhere for supplies. The European Union has studied potential restrictions on Russian oil imports but other countries, notably in Asia, continue to purchase cargoes.

Russia’s 2021 oil production was just over 524 million tons, or 10.52 million barrels per day. If Siluanov was talking about annual averages, a 17% decline would bring the nation’s output this year to some 435 million tons, or around 8.74 million barrels per day, the lowest in almost 20 years. 

In a month-on-month comparison, Russia’s oil production in the first 19 days of April was 8.2% lower than the March average, reaching around 10.11 million barrels per day, according to Bloomberg calculations based on data from the Energy Ministry’s CDU-TEK unit.