Russia’s Crude Oil Production Falls Short

Russia falls short of OPEC+ production target, highlighting ongoing challenges in the global oil market.

At a Glance

  • Russia’s crude oil production in December missed its OPEC+ target by 7,000 barrels per day
  • OPEC+ has delayed planned output increases to April 2025 due to weak global demand
  • Non-OPEC+ countries expected to increase crude oil output by over 1.1 million b/d in 2025
  • Global oil market surplus of 1.4 million b/d anticipated in 2025 if OPEC+ lifts production cuts
  • Russia, Iraq, and Kazakhstan pledge deeper cuts to compensate for past overproduction

Russia’s Production Shortfall and OPEC+ Adjustments

In December, Russia’s crude oil production fell short of its OPEC+ target, producing 8.971 million barrels per day, about 7,000 barrels below the agreed-upon level. This shortfall underscores the ongoing challenges faced by major oil-producing nations in meeting their production commitments. The situation is not unique to Russia, as other OPEC+ members like Kazakhstan and Iraq have also struggled to reach their production cut targets.

The OPEC+ alliance has responded by extending the timeframe for planned oil output increases. The group has postponed its production hikes to April 2025, with complete unwinding now expected by December 2026. This decision comes amid concerns over weak global demand and increased production from non-OPEC+ producers.

Global Oil Market Outlook

The International Energy Agency (IEA) has projected a significant surplus in the global oil market for 2025. According to their forecasts, if OPEC+ lifts production cuts, the market could see a surplus of 1.4 million barrels per day. Even if the cuts are maintained, a surplus of 950,000 barrels per day is still anticipated.

This surplus is driven in part by strong supply growth from non-OPEC+ countries. The United States, Brazil, Canada, Guyana, and Argentina are expected to increase their crude oil and natural gas liquids output by over 1.1 million barrels per day in 2025. This growth in production from non-OPEC+ nations poses a challenge to OPEC+’s efforts to manage global oil supply and prices.

Compensation and Future Cuts

In response to past overproduction, Russia, Iraq, and Kazakhstan have pledged to implement deeper cuts later in 2025. Russia’s overproduction in the first half of 2024 amounted to 480,000 barrels per day, necessitating significant compensatory measures. The country plans to implement these additional cuts primarily from March to September 2025.

Russia’s ability to implement these cuts may face challenges due to winter climate conditions and geological factors. As a result, the country has announced plans to delay additional curbs until the summer months when production adjustments can be more easily managed.

Geopolitical Factors and Market Uncertainties

The global oil market remains subject to various geopolitical factors and uncertainties. The potential impact of Donald Trump’s election win could significantly affect global trade and oil demand. While Trump has indicated a willingness to use tariffs, which could potentially dampen oil demand, he has also pledged to encourage U.S. fossil energy production.

Additionally, the Biden Administration’s plans to impose more sanctions on Russian oil exports, particularly targeting tankers, could further complicate the global oil supply situation. European countries have also announced new measures aimed at reducing Russia’s oil revenues, focusing on the country’s shadow fleet of tankers.

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