Russia to cut oil production in retaliation for Western sanctions
Breanne Deppisch
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Russia said Friday it would cut oil production by 500,000 barrels a day in retaliation for Western sanctions on its crude and refined oil exports, which came into full force earlier this week.
The cuts amount to roughly 5% of the country’s total exports for January.
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Oil prices jumped following the news, with futures for the international benchmark Brent crude at least 2.2% higher, up to $86.34 a barrel by the early mid-morning.
Delegates for OPEC+, the group of oil-producing nations and Russia, told Reuters that they were aware of Russia’s planned cuts and did not plan to raise their production output targets on the news.
Russia has repeatedly threatened to cut production in the months since G-7 leaders announced plans for a two-part price cap, which prohibits Moscow from shipping its crude oil above $60 per barrel and refined premium petroleum products above $100 per barrel.
The cap is designed to keep Russian products on the market while depriving Russian President Vladimir Putin of his revenue funding the war in Ukraine.
The cap on refined products took effect five days ago, alongside the EU’s ban on Russian refined petroleum imports.
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“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,” Russian Deputy Prime Minister Alexander Novak said in a statement.
“As of today, we are fully selling the entire volume of oil produced; however, as stated earlier, we will not sell oil to those who directly or indirectly adhere to the principles of the ‘price cap,'” he added.