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Oil in Global Economy Series: Russia to increase output in 2018 if agreement with OPEC not reached
Russia is holding non-complaints to the OPEC/N-OPEC agreement and dissenters at gunpoint.
Russian energy minister Alexander Novak said that Russia will increase output in 2018 if an agreement is not reached to extend the current deal that aims to reduce production by as much as 1.76 million barrels per day. Mr. Novak said in a press conference, “We forecast that in 2018 we will have small growth relative to the year 2017, but it will to a large extent depend on what decisions are taken on extending or not extending the deal with OPEC nations….We will now make our forecasts within a range of a possible output increase from today’s level if there is no deal”.
When asked about the quantity of the increase, Mr. Novak said it would be around 3.5-4 million tons.
How much are 4 million tons?
One million ton of oil is equivalent to 7.15 million barrels (approx.). So, 4 million ton is equivalent to almost 28.6 million barrels. To put it in context, this year, Russia is expected to produce 547 million tons of oil, so an increase of 4 million ton is not very large; it is around 0.73 percent.
The amount of increase is small. So why worry?
A sudden breakdown of a global agreement of this sort would lead to a major rush in production. The increase from the participating would be quite significant.