(Bloomberg) — Russia’s crude production has jumped to a new post-Soviet record, boosting the nation’s budget revenue as it prepares for talks with OPEC+ on further cooperation, according to a government official.

The country’s oil output is currently fluctuating between 1.54 million and 1.55 million tons a day — driven mainly by state-run giant Rosneft PJSC — the official said, asking not to be named as the information isn’t public yet. That equates to 11.29 million to 11.36 million barrels a day, beating the previous record of 11.25 million barrels a day set in October 2016 before Russia agreed with the Organization of Petroleum Exporting Countries to cut production.

Russia’s output increase comes just days before it meets in Algeria with other members of the group known as OPEC+. The producers agreed in June to start rolling back their output cuts to offset losses from countries including Venezuela and Iran while also responding to calls from U.S. President Donald Trump to ease pressure on prices. This weekend, ministers will discuss supply and demand forecasts for the fourth quarter and the potential for extending cooperation into next year.

While Russia could boost its production by about 300,000 barrels a day above the October 2016 record within a year, there’s still no decision on tapping this spare capacity and the size of the increase will depend on talks with the wider OPEC+ group, Russian Energy Minister Alexander Novak said last week.

Iran said this week that it would veto any OPEC decision which shrinks its market share. Iranian Oil Minister Bijan Namdar Zanganeh said an OPEC committee set to meet this weekend in Algiers has no authority to impose a new supply deal. He added that some producers are trying to create an alternative suppliers’ forum that supports U.S. policies hostile to Iran’s interests.

Russia and Saudi Arabia “can cooperate as much as they want based on their own interests,” Zanganeh told reporters in Tehran on Tuesday.

“But from the OPEC countries I have higher expectations and particularly in the current situation — and I’ve said this many times before — it’s not appropriate that two members start leading and taking on the leadership of an anti-Iranian current,“ he said.

Russia’s Benefits

Oil was trading near two-month highs in London, at almost $80 a barrel, as concern over demand contraction amid U.S.-China trade tensions is countered by supply losses from Iran and Venezuela.

Crude in rubles is close to the highest-ever levels reached earlier in September amid the currency’s weakness. Russia’s budget gains from energy taxes are set to jump almost 46 percent this year to a record-high 8.71 trillion rubles ($131 billion), according to estimates from the Russian Finance Ministry. Reliance on energy, which President Vladimir Putin has been struggling to cut in the past few years, is set to exceed 46 percent of the country’s overall budget, compared to 40 percent in 2017. That would be the highest level since 2014.

If Russian producers maintain September levels through to the end of the year, the nation’s full-year output target could be increased to 555 million tons, meaning an additional 2 million tons in the remaining 100 days, the government official said. That equates to as much as 150,000 barrels per day in addition to last month’s output of 11.21 million barrels.

Russia’s Energy Ministry and Rosneft, which accounts for more than 40 percent of the nation’s production, didn’t immediately comment. The highest level reached by the country during the Soviet era, on an annual-average basis, was 11.416 million barrels a day in 1987, according to BP Plc data.

While state forecasts anticipate an increase in production later this year, there’s no clarity yet on 2019 plans. The current OPEC+ cuts deal expires at the end of this year, unless producers replace it with a new one. Novak has said that Russia sees the need for continued cooperation across the group. This could involve removing output quotas but with an option to use this tool in future if the market requires.

Russia’s major oil producers have so far declined to comment on their output targets for next year. Gazprom Neft PJSC, the nation’s third-biggest oil producer, said it has the capacity to increase output next year. “We in principle are aiming to show growth,” Chief Financial Officer Alexey Yankevich said in an interview earlier this month. “But everything will depend on how the OPEC+ agreement will look.” The company hopes there will be some clarity by December when plans for 2019 are set.

With assistance from Dina Khrennikova, Golnar Motevalli and Olga Tanas. To contact the reporter on this story: Elena Mazneva in Moscow at emazneva@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Helen Robertson, Rakteem Katakey.





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