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Chart of the Day: Russia’s Oil Production

Summary

Figure (1) above shows Russia oil production since the beginning of 2022, just before the invasion of Ukraine. It also plots the major events since then which include the sanctions, the price cap, and OPEC+ meetings. The largest drop in production happened immediately after the invasion when European banks and insurance companies halted their operations in Russia or with Russian entities in the light of confusion about the reaction of the US and the EU to the invasion of Ukraine and the fear from sanctions and legal ramifications. In our view, it was the surprise reaction and the large number of major banks and companies that contributed to the decline. 

EOA’s Main Takeaways

Theoretically, by plotting the data and the events, it is hard to see the impact of the sanctions on production. But the decline was associated with OPEC+ cuts. However, we believe that some of what is considered part of the OPEC cuts was the result of sanctions, especially those related to the EU ban on imports of petroleum products that went into effect on February 5, 2023.