Russia is smashing post-Soviet oil records, producing more crude in September than it has in decades.
As U.S. drillers and investors wait impatiently on OPEC plans to cut production, analysts are carefully watching the cartel’s northern neighbor. Russia, while not part of the Organization of the Petroleum Exporting Countries, has at times promised to cut production and align with efforts to reduce supply and drive up oil prices.
If so, it didn’t start last month.
Russia produced 11 million barrels per day in September, a 200,000 barrel or 2 percent jump over its previous post-Soviet record, set in January, and a 400,000 barrel or 4 percent increase on the year, the country’s energy ministry reported.
Analysts at Tudor Pickering Holt pegged the rise to a weak ruble, but said the figures “continue to surprise.” Investment banking firm Piper Jaffray & Co. called the increase “staggering.”
The rise was driven in part by an 8 percent bump in production on the North Pacific island of Sakhalin, they said. State-owned oil companies Rosneft and GazpromNeft, plus the private Russian giant Lukoil, contributed the largest volume increases.
Still, analysts aren’t convinced the Russian spike will continue.
Piper Jaffray said September figures were a few thousand barrels lower than the International Energy Agency expected. Tudor Pickering said Russian Energy Minister Alexander Novak has discussed freezing production just under 11 million barrels per day. And Rosneft and Lukoil have predicted their volumes would decline in the second half of this year due to budget constraints.
That led Tudor Pickering, at least, to conclude that Russian oil production would drop about 3 percent next year.