OPEC Doesn’t Need to Boost Production to Replace Russian Oil Cuts

Minister of Foreign Affairs for Oil and Gas of Angola Jose Barroso, Wednesday (8/3), said the Organization of the Petroleum Exporting Countries (OPEC) did not need to increase its oil production to cover Russia’s cut in production which reached 500,000 barrels per day.

“We believe that Russian oil is still there,” said Jose Barroso. “They found a way, they found a new market… There is a balance in the market.”

Russia said it would cut supply by 500,000 bpd starting in March. The move follows the policies of the Group of Seven (G7) countries, the European Union and Australia which imposed a price cap of $60/barrel on cross-sea cargoes of Russian oil starting December 5.

Russia is looking for new buyers in countries that have not imposed sanctions, such as China and India.

If China imports more oil from Russia, then perhaps the country will reduce its oil imports from other countries, said Barroso.

“We believe that for the time being OPEC member countries do not need to increase their production,” he added.

Barroso could not say whether Angola was losing market share in China to Russia. Energy demand in China has again increased in line with Beijing’s policy to ease coronavirus restrictions.

Asked whether Angola would support an increase in OPEC’s production quota if it could produce more, Barroso said the country has a long way to go before it reaches its current quota.

OPEC and its allies, known as OPEC+, agreed to cut their production target by 2 million bpd from last November to 2023. As part of this, the 10 OPEC members bound by the deal had a target of producing 25.416 million bpd.

Angola alone produced 1.050 million bpd in February, below the OPEC target of 1.455 million bpd.

OPEC Secretary General Haitham Al Ghais said on Tuesday he was not concerned about the rerouting of Russian crude exports to countries such as China and India. [ah/rs]