Russian output growth to hit a wall in 2016

Production defied expectations last year. But weak prices, sanctions and higher taxes will start to hinder the country’s oil sector in the coming months

Russian oil output again hit another post-Soviet high in December – more evidence that the Kremlin’s policy on production seemingly knows no reverse gear. But as low prices, sanctions and a potential windfall tax squeeze cash flows, a change is coming. Russian production will hit a wall this year. The country’s crude and gas condensate output increased to 10.825m barrels a day in December, outpacing the previous record set in November, by 0.4%. Annual output for 2015 climbed 1.4% to 10.726m b/d compared with 2014, according to the Energy Ministry. Russian crude producers have been setting post-Soviet records even amid plunging prices and US and EU sanctions that curb access to international