Russia plans to cut its March oil production voluntarily by 500,000 barrels a day in response to the western price caps, said Deputy Prime Minister Alexander Novak.
(Bloomberg) — Russia plans to cut its March oil production voluntarily by 500,000 barrels a day in response to the western price caps, said Deputy Prime Minister Alexander Novak.
“Russia believes that the mechanism of price caps on Russian oil and petroleum products is an intervention in market relations and an extension of destructive energy policies of the collective West,” Novak said in a statement on Friday. The March production cuts will ensure a “recovery in market relations.”
Oil prices jumped on the news, with Brent crude erasing earlier losses to rise as much as 1.8% to $85.99 a barrel as of 8:36 a.m. in London.
Moscow’s unilateral production cut, which is the equivalent of about 5% of January output, has been hinted at repeatedly as a potential response to international sanctions. The move threatens renewed turmoil in an oil market that has otherwise taken in its stride the European Union’s bans on most seaborne imports of Russian crude, and most recently refined products.
As of now, Russia is able to sell its oil volumes to foreign markets, but it does not want to adhere to the price restrictions imposed by Western nations, Novak said.
“When making further decisions, we will act based on how the market situation is developing,” he said.
(Updates with oil price in third paragraph.)
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