Friday that Russia will reduce oil production by 500,000 barrels per day, or around 5% of output, in March.

 IN MARCH, RUSSIA WILL REDUCE OIL OUTPUT BY 500,000 BPD.

 

Following the West's imposition of price ceilings on Russian oil and oil products, Deputy Prime Minister Alexander Novak announced Friday that Russia will reduce oil production by 500,000 barrels per day, or around 5% of output, in March. The price of Brent crude increased following the announcement that Russia, the second-largest oil exporter in the world after Saudi Arabia, would be reducing its output. It surged by more than 2.5% daily to $86.6 per barrel.

 

According to a statement from Novak, "As of today, we are fully selling the total volume of oil produced, but as previously said, we will not sell oil to those who directly or indirectly adhere to the principles of the "price cap"."

 

In a statement, Novak stated.

Russia will voluntarily cut its production in this area by 500,000 barrels per day in March. The restoration of market relations will be aided by this.

 

On Friday, the Kremlin announced that it had discussed the plan to reduce output with a few producers in the OPEC+ group. Earlier on Friday, a Russian government source told Reuters that no formal consultations with the OPEC+ group had taken place. The production drop suggests that the price cap on Russian oil goods has had some effect as Russia negotiates the maze of restrictions that the West has placed to choke off its oil revenue.

 

As part of Western sanctions against Moscow over the conflict in Ukraine, the G7, the European Union, and Australia agreed to prohibit the use of maritime insurance, finance, and brokerage services from the West for seaborne Russian oil priced above $60 per barrel beginning on December 5. Additionally, starting on February 5, the EU forbade the purchase of Russian oil goods and established price caps. In response, Russia has outlawed transactions involving the use of any price-limit devices.

 

The last significant decline in Russian oil production occurred in April when sanctions imposed by the West over Ukraine caused an almost 9% decline. Since then, Russia has been successful in establishing logistical networks for its oil sales, primarily in Asia. Nine days after an OPEC+ panel, of which Russia is a member, backed the oil-producing group's current output strategy, leaving production restrictions agreed upon last year in place, Russia revealed its intention to reduce oil production.

 

According to Novak, "Russia thinks that the 'price cap' mechanism in the sale of Russian oil and oil products is an interference in market relations and a continuation of the harmful energy strategy of the collective West.

 

Later, according to a statement from his spokesperson, the cuts will only apply to crude oil and not to gas condensate, a sort of light oil. Despite various projections to the contrary, Russia's oil production increased by 2% to 535 million tonnes (10.7 million barrels per day) in 2017 mainly to a surge in shipments to Asia, particularly to India and China.

 

The sale of oil, a crucial source of income for the national budget, which recorded a $25 billion deficit in January, is now more difficult in Russia due to several new Western sanctions. Russia's current account surplus decreased by 58.2% to $8 billion in January due to lower export volumes, which reduced the country's capital reserves as Moscow increased budget spending.

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