Russia may cut oil production in response to price ceilings

Russia’s Deputy Prime Minister Alexander Novak said his country can cut crude production by 5-7 percent by early 2023, and will stop selling to countries that impose a price cap on crude it exports.

Novak, who first detailed the response to the price caps launched by Western countries in response to Moscow’s invasion of Ukraine, said output cuts could be as high as 500,000 to 700,000 barrels a day.

Russia, whose main income is oil and gas, was subjected to a series of sanctions after its invasion of Ukraine. Finally, the European Union (EU), the G7 countries and Australia implemented maximum price sanctions that prevent Russian oil from selling for more than $60 a barrel on December 5.

EU countries have also launched an embargo on Russian seaborne crude, while the US, Canada, Japan and the UK have made similar commitments.

PUTIN WILL SIGN NEXT WEEK

Russian President Vladimir Putin will sign a decree next week detailing Moscow’s response to the price ceiling sanction.

Novak, in his statement this morning, stated that the decree will prohibit the sale of oil and petroleum products to countries that participate in the application of the maximum price and companies that comply with the application. (Reuters)