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Russia to Gradually Increase Oil Exports - 2002-05-17

Russia has decided to increase oil exports gradually over the next two months to levels that existed before oil producers cut production in a bid to boost prices.

Russian Prime Minister Mikhail Kasyanov announced Friday that the time has come to gradually lift restrictions on oil exports.

He said that, over the next two months, production destined for international markets will return to normal seasonal levels.

The restrictions were imposed on January 1 at the request of the Organization of Petroleum Exporting Countries, OPEC. The OPEC position was taken in a bid to boost oil prices, which had dropped due to an oil glut and lower demand.

Russia is the world's second largest oil producer. Although it is not a member of OPEC, it did agree to cut exports by 150,000 barrels a day.

Domestic Russian oil producers had been wanting to scrap the production restrictions for some time, fearing that they would lose markets if they did not boost output.

Oil prices rose somewhat on world markets Friday, but stopped short of the eight-month high they reached earlier in the week, as concerns eased over a potential disruption in supply. In the United States, prices rose slightly this week climbing briefly above $29 a barrel for the first time since the September terrorist attacks on America.

Speculation that Russia would remove production restraints was viewed as one of the factors that helped keep oil prices in check. Another was that U.S. fuel inventories are rising, erasing concerns over limited short-term supply.

Gasoline demand in the United States is also down, falling four percent in April, compared with the same month last year.

OPEC is due to review market conditions when oil ministers meet in Vienna on June 26. The oil cartel has cut output by its members some five million barrels per day since January of this year.