Reuters/RIA Novosti
- Russia continues to export and produce huge volumes of crude oil, despite previously saying it would slash production.
- Global energy demand is slowing as recession concerns mount, and the additional oil supply is weighing on prices.
- West Texas Intermediate futures dropped below $70 a barrel this week for the first time since March.
Russia is exporting higher-than-expected volumes of oil, and that's left traders thinking Moscow could be cheating on its own pledge to slash production, according to a Wall Street Journal report.
That additional supply is weighing on oil prices, which are also under pressure from fears about a recession and doubts about a rebound in Chinese demand.
Brent crude, the international benchmark, has dropped by 17% from early April and dipped below $70 a barrel earlier this week before regaining that level. And West Texas Intermediate, the US benchmark, hit a five-week low on Wednesday.
Morgan Stanley analysts this week lowered their Brent forecast for the end of the year from $87.50 to $75 a barrel, citing a demand surge from China being already played out, as well as Russia's still-high oil production.
In February, Russia said it would cut production by 500,000 barrels a day. And last month, it pledged to extend those cuts, claiming retaliation for Western sanction. Meanwhile, Saudi Arabia and other members of OPEC+ announced reductions in output quotas too.
To be sure, exporting more oil isn't the same as pumping more oil out of the ground. And it's possible Russia could be cutting production while boosting exports in the short term, with a drop-off coming later.
In fact, Russian data show more oil wells were idled in March, suggesting less production activity, according to Bloomberg.
And on Thursday, Deputy Prime Minister Alexander Novak reaffirmed Russia's pledge to cut production, saying reports of higher tanker shipments don't account for lower pipeline shipments.