Russia to voluntarily cut oil production by 500,000 bpd in March

Deputy Prime Minister Alexander Novak said that Russia would voluntarily cut oil production by 500,000 barrels per day in March. The country will not sell oil to those who directly or indirectly adhere to the price ceiling. Further decisions on oil production will be made taking into account the current market situation, Mr. Novak added.

“Today, we are fully selling the entire volume of oil produced, however, as stated earlier, we will not sell oil to those who directly or indirectly adhere to the principles of the price ceiling. In this regard, Russia will voluntarily reduce production by 500 thousand barrels per day in March,” reports press office government words of the vice-premier. In his opinion, this decision will contribute to the restoration of market relations.

Mr. Novak called the price ceiling “a continuation of the destructive energy policy of the countries of the collective West.” He believes that in the future this restriction may lead to an oil shortage due to a decrease in investment in the oil sector. Similar consequences may spread to other sectors of the global economy, the vice premier added.

After the words of Mr. Novak, the price of the April futures for Brent oil on the London Stock Exchange ICE went up. As of 11:50 Moscow time, the price of Brent is growing by 1.62% to $85.87 per barrel.

On December 5, the ceiling on oil prices at $60 per barrel, introduced by the G7 countries, the EU and Australia, came into force. Since February 5, price limits for oil products from Russia at the level of $100 and $45 per barrel have also come into force – for products that are traded at a premium and a discount to oil, respectively.

The day before, Kommersant reported that in the first week of February, Russian oil companies increased the production of raw materials in Russia by 0.7%, to 1.491 million tons per day (relative to the average level in January). During the year, oil producers were almost able to restore the level of pre-sanction oil production. The growth in production is explained by the fact that oil companies, under sanctions, prefer to increase exports by providing large discounts.

Read more about the growth of oil production in Russia – in the publication “Kommersant” “Loot comes true”.

Erdni Kagaltynov