Last month, Russia’s oil production dropped below its quota within the OPEC+ framework, as the country struggled to find buyers for its sanctioned oil, compounded by drone attacks from Ukraine affecting refinery operations.
In November, Russia produced an average of 9.43 million barrels per day, as reported by sources familiar with the data who requested anonymity to protect confidentiality. While this figure slightly rose by 19,000 barrels per day compared to October, it remains over 100,000 barrels per day short of the country’s target for November, according to Bloomberg calculations.
Largest Discrepancy
This marks the largest discrepancy between Russia’s actual production and its monthly OPEC+ quota, including compensatory cuts, in over two years. This situation signals a significant challenge for Moscow in selling its oil, a crucial revenue source that the Kremlin relies on to finance its military operations in Ukraine.
Russia has consistently struggled to adhere to its OPEC+ production targets, often exceeding them and necessitating additional cuts to balance the oversupply. The latest reductions occurred in October, as noted by the Organization of the Petroleum Exporting Countries.
Impact of Sanctions
Recent U.S. sanctions against oil giants Rosneft and Lukoil have diminished demand for Russian oil from key buyers like India. Nevertheless, traders and refiners believe that volumes may recover as new, non-sanctioned suppliers and trading intermediaries emerge.
The challenge of securing buyers has led to an increase in stranded Russian oil at sea. In addition to vessels waiting for extended periods, some are now making longer trips.
Drone Attacks
Last month, Ukraine carried out a record number of drone strikes on Russian refineries, exerting pressure on crude refining volumes as companies hurried to repair damaged infrastructure. Both sides are engaged in an escalating energy conflict, vying for a significant advantage amid stalled peace negotiations.
The Russian Ministry of Energy has not yet responded to requests for comments regarding November’s production figures.
Deputy Prime Minister Alexander Novak stated in October, according to TASS, that Russia has the capacity to increase oil production further, but it will occur gradually. He also mentioned last month that November’s data indicate production is on the rise and has not been significantly affected by the recent sanctions, as per Interfax reports.