Russia has agreed with its OPEC+ partners on further cuts to its crude exports, Deputy Prime Minister Alexander Novak told President Vladimir Putin.

“We have agreed, but we’ll announce main parameters next week,” Novak said at a televised government meeting with Putin.  

Russia has pledged to curb its crude exports by 500,000 barrels a day in August, then taper the curbs to 300,000 barrels a day next month. On Wednesday, Novak said that Russia was discussing extending the September export reduction into October, according to media reports.

Eoin Treacy's view

OPEC+ have announced production cuts close to the first of the month for each of the last three months and there does not appear to be an end in sight. Most OPEC+ members cannot afford prices to fall much below $75. That suggests they will continue to do what is necessary to ensure prices remain above that price point.

Most unconventional supply is economic above that level too. The question then is how expensive it will be to sustain production as fields mature. There is a great deal of uncertainty around when the Permian basin will hit peak production. After that point, the cost of production will steadily increase. That’s providing OPEC+ with greater control as the marginal price setter.

Brent crude continues to firm from the region of the 200d-ay MA and has clearly broken the medium-term downtrend. A sustained move below $83 would  be required to question recovery potential.
The Energy SPDR ETF continues to steady in the region of the upper side of the 15-year range.
The Oil Services ETF continues to hold a medium-term sequence of higher reaction lows. It is currently pausing in the region of the 2022 peaks and a sustained move below the 1000-day MA would be required to question medium-term recovery potential.

Higher oil prices mean higher production cost for many other commodities. Historically, the cure for higher prices has been high prices. The challenge in an inflationary environment is figuring out what constitutes a high price.