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Russia Halts Oil-Output Boost After July Jump Amid Record Gains

Elena Mazneva
An employee uses a pedestrian crossing outside the Royal Dutch Shell Plc lubricants blending plant in Torzhok, Russia, on Wednesday, Feb. 7, 2018. The oil-price rally worked both ways for Royal Dutch Shell Plc as improved exploration and production lifted profit to a three-year high while refining and trading fell short of expectations as margins shrank. Photographer: Andrey Rudakov/Bloomberg

Russia kept pumping oil near post-Soviet records last month as it reaped benefits from a deal with OPEC easing output caps and oil prices at an all-time high in rubles.

The nation extracted an average of 11.21 million barrels of crude per day in August, according to data emailed Sunday by the Russian Energy Ministry’s CDU-TEK unit. Volumes were little changed from July, when the country’s output soared to just shy of a peak in 2016.

Russia has been the main beneficiary from its agreement with the Organization of Petroleum Exporting Countries made two months ago to unfetter production. The country added nearly 250,000 barrels a day of output in June and July, while its biggest partner in the pact -- Saudi Arabia -- has kept supply below the level it was said to have indicated in June amid concerns over strength of global demand.

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Still, the Saudis pumped more than 10.42 million barrels a day last month, according to two OPEC delegates. That’s an increase of nearly 140,000 barrels from the July output it has reported to OPEC. The cartel is due to disclose its August data on Sept. 12.

Russia plans to maintain production at around 11.2 million barrels a day through the end of this year, a government official said last month.

All Russia’s top crude producers showed a modest increase in production in August, the CDU-TEK data showed. That was offset by decreased output from smaller suppliers, mainly at Sakhalin-1, an offshore joint venture operated by Exxon Mobil Corp. The nation’s overall exports rose 1.9 percent compared to July to 5.55 million barrels a day as Russia benefited from record-high oil prices in rubles.

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Traders and analysts are scrutinizing Russian and OPEC production levels for clues on whether they will be able to fill a supply gap that’s likely to be created once U.S. sanctions of Iran’s oil exports hit in November. Venezuela’s output has also dropped amid an economic crisis. On the other hand, an ongoing trade dispute between the America and China is creating concerns it will impact demand.

A committee of OPEC and its allies is scheduled to meet in Algeria on Sept. 23 to discuss the market situation.

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