Numbers In Perspective

Here is the thing about OPEC, Russia, and their proposed production cuts. Those numbers look well and good, but are quite misleading. Lets take Russia. They have said that they will join in the OPEC deal and cut production by 300K barrels per day. Great. That’s a lot, and should ease the glut. But it really doesn’t when you look at the big picture. Because the Ruble has been almost halved in value since 2014 and oil is all sold in good old American greenbacks, the price slide of the past few years has barely affected the big Russian oil companies. And they have spent the past few years ramping up production hard. In November they were able to output 11.2 million barrels per day. They now have production almost up to the peak levels of the old Soviet Union. And in November they were able to product almost a half million barrels more per day than they were in August of this year. So while yes they will cut production, they are still producing at almost record levels. And this cut is if anything, it is just a way to bring output down to sustainable levels while looking like heroes who are helping the entire industry. And to really put the scope of this con in perspective, Russia was only producing about 10.6 million barrels per day at the time of the price crash. So while OPEC and the US were pointing fingers and blaming each other for record outputs, it was actually Russia who has been quietly unbalancing the market.