Russia Announces Oil Production Cuts in Response to Sanctions – Politico

Oil prices rose on Friday after the Kremlin said it would cut oil production by about 5 percent in March in response to Western sanctions and G7 price caps on Russian oil.

Deputy Prime Minister Alexander Novak said Russia would “voluntarily cut production by 500,000 barrels a day.”

“From today we are selling the entire amount of oil produced, but as stated earlier, we will not sell oil directly or indirectly to them. Adhere to the principles of the ‘price cap,'” Novak said in a statement.

Brent crude rose from $84 to $86 a barrel in morning trading. Russia is the world’s second largest crude oil exporter.

The EU banned Russian crude imports in December; Earlier this month, it also introduced sanctions on Russian oil products such as diesel and gasoline. Both measures are complemented by a price cap on global trade in Russian oil, enforced by the G7, the EU and Australian shipping and insurance companies that refuse to facilitate sales above the cap level.

Russia’s vital fossil fuel revenues have taken a hit from the ban, as buyers in Asia and elsewhere leverage price caps to negotiate lower prices for Russian crude.

Oil traders had previously warned that Russia may cut production in an effort to create global security of supply concerns and boost prices.

Simone Tagliapietra, a senior fellow at the Bruegel think tank, said the move was “an early sign that Russia may be trying to manipulate oil supplies after last year’s failed attempt to weaponize natural gas.”