Russian Oil Production Set for Slight Decline Amid Refining Capacity Constraints

Russian Deputy Prime Minister Alexander Novak announced that the country's oil production will see a slight decline in 2026 due to unplanned maintenance affecting several Russian refineries. According to him, this situation is temporary and production is expected to recover once the units return to service.

The revision comes as part of Russia's refining infrastructure has been operating below nameplate capacity for several months. The deputy prime minister linked the availability of refining capacity to the level of upstream production.

This decline in oil production is attributed largely to the structural backdrop caused by the war in Ukraine, including European Union-imposed embargoes on seaborne imports of Russian crude oil and refined products. Additionally, drone attacks targeting Russian refineries have contributed to the decline in available processing capacity, partly explaining the decline in crude production itself.

The deputy prime minister also emphasized OPEC+'s influence on world markets amid a broader disruption to the global oil market caused by tensions in the Strait of Hormuz. Novak described this disruption as localized and reiterated that OPEC+ remains significant due to its members' share of global production and international trade.