Russian oil production rose to a post-Soviet record of 10.78 million barrels a day last month, besting Saudi Arabia’s output of 10.1 million and contributing to a renewed slump in oil prices.
The increase in production reported November 2 reflects Russia’s strategy of defending its market share as the Saudis and other rivals from the Gulf have started offering alternative supplies to Moscow’s traditional markets.
Russian production has withstood a collapse in oil prices and a global supply glut, while output by contrast has plummeted 5 percent since peaking in the United States, where low prices have forced oil drillers to slash production and jobs.
Analysts say Russian oil companies are cushioned by oil-extraction and export taxes which shrink along with fallng prices. The sharply weaker ruble also has reduced their costs.
“Through the tax framework, the government took the brunt of the blow, just as it used to take most of the windfall profits” when oil prices were soaring, said Artem Konchin, analyst at Otkritie Capital in Moscow.
Russia’s output surge helped spur another drop in premium crude prices to $48.79 in London November 2.