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Russia, Kazakhstan Extend Oil Cuts to Stabilize Market

By Vusala Abbasova April 5, 2023

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The recent voluntary production cuts, which are set to take effect from May, were unexpected and have been declared in addition to the output cuts that were already agreed upon in October. / Getty Images

On Sunday, some of the biggest oil-exporting countries declared an additional reduction of around 1.16 million barrels per day in oil production, aiming to stabilize a market that has been continuously declining since last June.

As per the recent decision by several OPEC and non-OPEC oil-producing countries, known as OPEC+, two Caspian nations, Russia and Kazakhstan, have committed to lowering their oil production by a total of 578,000 barrels per day. Russia has agreed to extend its current 500,000 barrels per day oil production cut until the end of this year, while Kazakhstan has pledged to voluntarily reduce its oil output by 78,000 bpd.

According to Russian Deputy Prime Minister Alexander Novak, the current high volatility and unpredictability of the oil market can be attributed to a number of factors, including ongoing banking crises in the United States and Europe, the unpredictability of the global economy, and short-sighted decisions in energy policy. 

“Predictability on the global oil market is a key element of energy security,” TASS quoted Novak as saying on Sunday.

In February, Moscow had announced these production cuts unilaterally in response to the introduction of price caps by the West.

Meanwhile, the Kazakh Energy Ministry has announced that the country’s decision to voluntarily reduce oil production is a precautionary step, in addition to the production cut agreed upon during the 33rd OPEC and non-OPEC Ministerial Meeting held on October 5, 2022.

In addition to Russia and Kazakhstan, six other countries have also announced voluntary production cuts. These nations include Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Oman, and Algeria. Saudi Arabia, for instance, has committed to reducing its production by 500,000 barrels per day until the end of this year. Similarly, the United Arab Emirates, Iraq, and Kuwait have agreed to reduce their production by 144,000 barrels per day, 211,000 barrels per day, and 128,000 barrels per day, respectively. Oman and Algeria have also decided to cut their production by 40,000 barrels per day and 48,000 barrels per day, respectively.

The recent voluntary production cuts, which are set to take effect from May, were unexpected and have been declared in addition to the output cuts that were already agreed upon in October. During the October meeting, OPEC+ had agreed to impose output cuts of two million barrels per day from November onwards, which had caused concerns in the United States as tighter supply typically leads to an increase in oil prices.