Oil prices rose on February 10 after the Kremlin said it would cut oil production by around 5 percent in March in response to Western sanctions and the G7 price caps on Russian oil.
Deputy Prime Minister Alexander Novak said Russia would “voluntarily reduce production by 500,000 barrels per day.”
“As of today we are 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,’” Novak said in a statement.
Brent crude prices rose in morning trading from $84 to $86 per barrel. Russia is the world’s second-largest exporter of crude oil.
The EU banned imports of Russian crude in December; earlier this month, it also introduced a ban on Russian oil products such as diesel and gasoline. Both measures are supplemented by price caps on the global trade of Russian oil, enforced by G7, EU and Australian shipping and insurance firms refusing to facilitate sales above the cap levels.
Russia’s vital fossil fuel income has taken a hit as a result of the sanctions, as buyers in Asia and elsewhere leverage the price caps to negotiate lower prices for Russian crude oil.
Oil traders previously warned that Russia was likely to cut production in an attempt to create global security of supply concerns and push up prices.
Simone Tagliapietra, senior fellow at the Bruegel think tank, said the move is an “early sign that Russia might try to weaponize oil supplies after last year’s failed attempt to weaponize natural gas.”
