Novak: Russia to cut oil output voluntarily by 500,000 bpd in March
MOSCOW. Feb 10 (Interfax) - Russia intends to cut oil production by 500,000 barrels per day in March, Deputy Prime Minister Alexander Novak told reporters.
"As of today, we are fully selling the entire volume of oil produced; however, as previously stated, we will not sell oil to those who directly or indirectly adhere to the price cap principle. In this regard, Russia will voluntarily reduce production by 500,000 bpd. This will contribute to the restoration of market relations," Novak said.
Novak noted that when taking further decisions, Moscow would base said decisions on the current market situation.
The deputy prime minister recalled that Russia considers the price cap mechanism as "interfering in market relations and continuing the destructive energy policy of the countries of the collective West".
"Going forward, this could not only lead to a decrease in investment in the oil sector and, accordingly, an oil shortage in the future, but could also extend to other sectors of the global economy with similar consequences," Novak said.
Novak earlier reported that oil production in Russia has remained stable over the past few months at 9.8-9.9 million bpd despite the imposed sanctions, emphasizing that February's volumes are at the same level, though there are also risks of a decrease in output.
As reported, the ban on purchasing Russian oil by the European Union and G7 countries entered into force on December 5, 2022; and the embargo on importing Russian petroleum products entered into force on February 5, 2023. There is also a ban on the seaborne transportation of Russian oil and petroleum products, which entered into force at the same time, when the products are sold in excess of the established price cap.
The price cap for oil is $60 per barrel; the cap for petroleum products is $100 per barrel, for diesel fuel and gasoline; and the cap for low-added-value products, such as fuel oil and naphtha, is $45 per barrel.
The Kremlin considers the price cap to be a non-market instrument. President Vladimir Putin has signed a decree prohibiting the sale of oil within the price cap, and the government has issued a resolution that sets out the conditions for applying the decree. Both documents entered into force on February 1. Meantime, Putin can make exceptions to the ban based on a special decision.