Russia will cut oil production in March by 500,000 barrels per day, equivalent to about 5% of crude output, Russian Deputy Prime Minister Oleksandr Novak said on Friday after the West imposed price caps on oil and petroleum product exports. . Reuters reports.
The Group of Advanced Industrialized Nations (G7), the European Union and Australia agreed on December 5, 2022 to ban Western companies from providing insurance, finance and brokerage services to vessels carrying Russian crude oil at prices above $60 a barrel as part of sanctions imposed by to Moscow for invading Ukraine. Later, the European Union imposed an embargo on the purchase of oil products from Russia on February 5.
“We are currently selling the entire amount of oil produced, however, as we have already said, we will not sell oil to those who directly or indirectly adhere to the principles of the price ceiling,” Oleksandr Novak said in a press release.
“Regarding this aspect, Russia will voluntarily reduce its production by 500,000 barrels per day in March. This will contribute to the restoration of relations on the market,” the Russian vice-prime minister added.
The crude oil market reacted immediately
Brent crude rose more than 2% to $86.36 a barrel in response to the announcement of output cuts by Russia, the world’s second-largest crude exporter after Saudi Arabia.
“Russia considers the introduced “price ceiling” for the sale of Russian oil and oil products to be an interference in market relations and a continuation of the destructive policy of Western countries in the field of energy,” Oleksandr Novak said on Friday.
Despite many forecasts of a cut due to Western sanctions, Russia’s oil production actually rose 2% last year to a total of 535 million tonnes (10.7 million barrels per day), thanks to increased sales in Asian markets, particularly India and China.
However, after several rounds of new sanctions imposed by the West, Russia is currently facing even greater challenges in maintaining oil production, an important source of revenue for the Russian state budget. (Agerpress)
Source: Hot News
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