A government source told Reuters today, Friday, that Russia's latest commitment to reduce oil exports will not require a similar cut in production, as more fuel is needed to meet domestic demand. The source stated, "Russia is unlikely to have to cut production in August due to increased consumption in the domestic market. As we know, prices are rising and there is not enough fuel."
Russia has already pledged to cut its oil production from March to the end of the year by about 500,000 barrels per day, or approximately five percent of its output. The Russian Ministry of Oil said today, Friday, to TASS news agency, "The country will reduce its oil supplies by 500,000 barrels per day in August by cutting its exports."
The ministry noted, "Russia confirms that it will reduce supplies to oil markets by 500,000 barrels per day in August through export reductions. This means taking all necessary measures to achieve this goal within the framework of voluntary cuts." Russia needs to inject enough fuel into the domestic market to meet rising summer demand. It also faces the challenge of high wholesale gasoline prices, due in part to supply shortages and sluggish production capacity at refineries.
