Opec+ previously announced additional cuts of 1.16 million barrels per day in April. Credit: BUTENKOV ALEKSEI via Shutterstock.

Russian vice-president Alexander Novak said on Thursday that the Organization of Petroleum Exporting Countries (OPEC+) needs no further production cuts despite falling oil prices.

The statement came after Novak told an event in Moscow on Wednesday that OPEC+ remains an “efficient tool” for the coordination of global oil markets. He claimed that the group, which includes the world’s largest oil producers, does not regulate oil prices but “balances interests between exporters and consumers”.

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Earlier this month OPEC+ announced a combined production cut of 1.16 million barrels per day (bpd) on top of previously planned cuts. Oil prices soared following the announcement and investment bank Goldman Sachs warned of a potential deficit in the market.

Novak maintains that OPEC+ does not expect oil shortages following production cuts. The International Energy Agency, however, predicts in its monthly oil report that world oil supply will be pushed down by 400,000bpd by the end of 2023 as a result of the OPEC+ cuts.

Novak was asked if the group needed to lower its output further because of falling oil prices. He said: “Well, no, of course not because we only made a decision [on reduction] a month ago, and it will come into force from May for those countries that have joined,” Reuters reports.

Redirection of Russian oil exports

Oil demand in China, a key export market for Russian oil, has been lower than expected. Novak nonetheless claimed that Russia has reached its total target output this year.

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In February, Russia announced a 500,000bpd production cut, equating to around 5% of daily output, for the duration of March. Earlier this month, Novak extended the cut until the end of the year.

Novak said that Russian oil and gas production is expected to decline this year to around 515 million tonnes compared with 535 million tonnes in 2022.

Despite the implementation of sanctions by Western governments following the invasion of Ukraine, Russia has increased sales to other markets. In March, Novak claimed that all oil affected by Western sanctions had been “redirected” to “friendlier” countries, which included India, China and allies from OPEC+.

Novak claimed that in 2023, 140 million tonnes of oil and oil products will be diverted to Asia that would previously have gone to Europe. He also stated that Russia will supply between 80 million tonnes and 90 million tonnes of oil and oil products to Western nations in the same time frame.