To overcome the fear of losing market share, Russia has decided to increase the production of oil. Here, it is worth mentioning that Russia had withheld the supply since 2017. The news of increased supply by Russia has caused a slump in prices on Friday. Russia had withheld the supply in concert with Organization of Petroleum Exporting Countries (OPEC). Now, this withholding the supply has encouraged the other small producers to increase their supplies and earn the profit. Russia and OPEC had signed an oil supply pact 17 months ago. Now, the energy ministers of Russia and Saudi Arabia have met to review the terms of the pact.
They have hinted to increase the supply to maintain their market share. The decision has come at such a time when OPEC and non-OPEC producers are going to meet in June for mutual discussions. Here, it is important to mention that oil prices have risen 20% for the last one year. This increase in prices has benefitted the Russians as well as OPEC countries. But now, they are losing market shares. This restriction in supply has increased the production of US crude oil by 25% in the last two years. This is because the oil supply by United States, Canada, and Brazil does not come under OPEC-Russian treaty.
This hint of a gradual increase in supply has decreased the price of Brent crude futures by 0.5%. Also, the annual decrease in price touches 2.6%. There is a 0.4% decrease in West Texas Intermediate (WTI) crude futures. Russia wants to end this supply cut now. The average industrial profit has remained positive this year due to rising oil prices. Now, the fear of losing the market share seems a hindrance in restricting the oil supplies. As a result, Russia wants to boost the supply after meeting with OPEC countries next month.