Russia will cut oil production from next month in response to the price cap imposed by western nations, the country’s top energy official said, in the first sign Moscow is moving to weaponize oil supplies after slashing natural gas exports to Europe last year.
The cut of 500,000 barrels a day, the equivalent of about 5 per cent of Russia’s production or 0.5 per cent of world supply, will help “restore market relations”, Alexander Novak said in a statement on Friday.
The announcement comes days after the latest EU sanctions and other western measures against the Russian oil sector took effect in retaliation for Moscow’s full-scale invasion of Ukraine and just two weeks before the one-year anniversary of the start of the war.
The EU extended its ban on seaborne imports of Russian crude to cover refined fuels such as diesel and petrol on February 5, while the G7 simultaneously imposed a price cap on the same fuels buyers must abide by if they are to access western tanker and insurance markets.
Novak, who is deputy prime minister and leads Russia’s negotiations with the Opec+ group of oil producers, has long warned that Moscow could retaliate against western measures designed to hit its oil revenues.
“Russia believes the price cap mechanism for selling Russian oil and oil products interferes with market relations,” Novak said. “It continues the destructive energy policy of the countries of the collective west.”
Brent crude, the international benchmark, jumped 2.3 per cent to $86.43 a barrel immediately after the announcement on Friday, having earlier traded largely flat on the day.
https://www.ft.com/content/dc898690-653a-47f1-af56-b0216abd7dcd
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