Russia’s 300Kbpd Cut on Top of Saudi’s Bet to Maintain its 1Mbpd Cut Hint at a Very Bullish Scenario for Brent

Oil hit a 2023 high in September near $98 a barrel for Brent crude, although it has since weakened to trade around $87.40 as of this writing. Concerns about economic growth and demand have weighed on prices, despite support from conflict in the Middle East.

Meanwhile, Russia’s energy ministry says November exports of crude oil and petroleum products will decrease by more than 300,000 barrels per day, compared to the average value of May-June. The ministry also said Russia would continue to fully participate in the voluntary efforts of OPEC+ to stabilize energy markets.

Saudi Arabia and Russia have agreed to continue voluntary oil supply cuts, which total 1.3 million barrels per day by the end of the year, which represents more than 1% of global demand. Russian Deputy Prime Minister Alexander Novak first mentioned last month that oil products were included in the country's decision to cut oil exports by 300,000 barrels per day.

Since an international ban on most petroleum products exported from Russia was lifted in October, it has become easier for Moscow to control crude oil and overall fuel exports after Russia announced a ban on fuel exports on September 21 to address domestic shortages and high prices.

On top of that, according to Reuters, influential OPEC member Saudi Arabia recently promised to reconfirm the extension of its oil output cut of 1 million barrels per day through December. All these events unambiguously point to constantly increasing support for oil’s extra-bullish scenario.