Russia Says It Will Cut Oil Production Over Western Caps

MOSCOW—Russia Friday’s announcement that will cut Oil production will increase by 500,000 barrels per hour next month, as the West has capped its crude oil prices in protest at Ukraine’s actions.

“As of today, we fully sell all our crude output, but as we stated before, we will not sell oil to those who directly or indirectly adhere to the ‘price ceiling,’” Russian news agencies reported that Alexander Novak was the Deputy Prime Minister.

“In connection with that, Russia will voluntarily cut production by 500,000 barrels a day. It will help restore market-style relations,” He stated.

Analysts suggest that one Russian solution to the cap might be to reduce production to raise oil. PricesThis could lead to higher gasoline prices at pump due to less oil being available on the global market.

Brent crude oil, an international benchmark, rose 2.2 percent to $86.42 per barrel on Friday.

The Group of Seven countries has imposed a $60 per-barrel price limit on Russian oil shipping to non-Western nations. The goal is to keep oil flowing to the world to prevent price spikes that were seen last year, while limiting Russia’s financial gains that can be used to pay for its campaign against Ukraine.

This ban is enforced by preventing Western companies with a large control over shipping and insurance from transporting oil above the limit.

Russia said that it would not sell oil to any country that does not observe the cap. This is a pointless since Russian oil has been trading below this price ceiling in recent months. The cap and an accompanying embargo by the European Union on all Russian oil have allowed customers in India, Turkey and China to demand substantial discounts on Russian crude oil.

As the world slows down, oil’s demand is decreasing, it is unclear what impact a reduction of 500,000 barrels per daily would have.

Russia was part of the OPEC+ oil producer alliance. In October, it announced that it would reduce oil production by 2million barrels per hour. But prices dropped below $80 per barrel by December.

Asked if Russia consulted OPEC+ members about Moscow’s new production cut, Kremlin spokesman Dmitry Peskov said “there had been conversations with some members of the OPEC+” Before the announcement of the move. He didn’t offer any details.

Novak, however, insisted that Moscow took the decision without consulting anyone.

“It’s a voluntary cut; there have been no consultations with anyone regarding it,” According to Russian media, the deputy prime Minister stated.

*As an Amazon Associate I earn from qualifying purchases