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Russia’s Aging Infrastructure Threatens Oil Output Pact

Experts warn that Russia’s compliance with an oil production deal with Saudi Arabia and the US could be threatened by the country’s outdated infrastructure and other complications, such as winding down a broad network of wells across its massive landmass. In early April, the three countries agreed to head a multinational coalition that seemed to cut 13% of global oil production by the end of jus this year. The curbs aim to address a sharp drop in demand that is a result of the COVID-19 movement and travel restrictions.

The lack of demand coupled with a Saudi-Russian price war and an unprecedented shortage of oil space have all been factors in the 63% decline in the global benchmark price since January of 2020. The agreement between the countries relies on Russia committing to occurring 2 million barrels a day, which represents roughly a fifth of current production within the country. However, the oil infrastructure itself may not be able to handle deep production cuts.

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