Russia Tops World’s Biggest Oil Producers List

Russia pumped the most crude oil in the world in December, dethroning Saudi Arabia as the world’s biggest oil producer. The difference in the two countries’ daily averages stood at 30,000 barrels.

According to data from the Joint Organizations Data Initiative, Russia produced some 10.49 million barrels daily in December, while Saudi Arabia’s output averaged 10.46 million bpd – a substantial decline from November, when the Kingdom pumped 10.72 million bpd. The U.S came in third, with a daily average of 8.8 million bpd.

Saudi Arabia has gone out of its way to convince the market that it is serious about the production-cutting effort, reducing its output more than it had agreed to: in January, the Kingdom reported a daily average of 9.75 million barrels, down by 700,000 bpd from December. This strategy has helped to increase the overall production cut deal compliance rate among OPEC members and has earned it praise from the IEA, but has not been enough to boost prices closer to US$60 a barrel.

Russia, meanwhile, has been cutting its 300,000 bpd gradually, reporting a 100,000-bpd reduction in its January output. It will cut another 100,000 bpd by the end of next month, and the rest of the agreed amount in the second quarter. Early this month, Russian Energy Minister Alexander Novak announced that global oil output was cut by 1.4 million barrels per day in January, in the aftermath of the deal between OPEC and non-OPEC countries to rebalance the market.

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The OPEC cut has been a boon for Russia. Besides agreeing to a much smaller cut than its Saudi rivals, it has now also gained expanded access to Asian markets, as crude from their usual Middle Eastern suppliers becomes more expensive thanks to the cuts.

Chinese refinery demand already helped Russia outstrip Saudi Arabia to take the top spot in crude exports to China last year, and now demand from the teapots – the independent refineries in the world’s #2 consumer – is driving higher exports of the Urals blend, which is eating into the market share of Middle Eastern OPEC members.

By Irina Slav for Oilprice.com

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