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Russia Ready to Cut Oil Production in Response to Oil Price Cap, Deputy Prime Minister Says

CC0 / / Oil rig
Oil rig - Sputnik International, 1920, 23.12.2022
The European Union's $60 per barrel price cap on Russian oil went into effect on December 5, along with a ban on seaborne exports.
Russian Deputy Prime Minister Alexander Novak has stated that Moscow stands ready to reduce oil production as a response measure to the fuel price cap introduced by the EU and G7 members. According to him, the output could be slashed by up to 7% in early 2023.
Novak added that in retaliation, Russia plans to ban the supply of oil and petroleum products to countries and legal entities that require compliance with the price cap in contracts.
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“Therefore, we are ready to reduce partial production, and at the beginning of next year we may have a reduction of somewhere by 500-700 thousand barrels per day. This is about 5-7% for us,” he said. The Russian Deputy Prime Minister noted that even though "this volume is insignificant, such risks exist."

He also said that oil production in Russia will increase by 2% and oil refining will increase by 5%, but that the gas output will decrease by 18-20% by the end of 2022.
"By the end of the year in the oil industry, we will even have a 2% increase in production to 535 million tons compared to last year. We will produce about 5% more petroleum products than last year," Novak pointed out.
"There is a partial decrease in the gas industry, about 18-20%. Nevertheless, our gas industry will produce 671 billion cubic meters of gas this year. This is also a large volume, of which about 470 billion cubic meters will go to the domestic market," he added.
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The statement comes after Russia’s President Vladimir Putin told reporters on Thursday that he would sign a decree on retaliatory measures to the cap on Russian oil prices early next week, in what he described as precautionary measures.
The EU’s $60 per barrel price cap on Russian oil, which went into effect on December 5, will be reviewed every two months to remain at 5% below the International Energy Agency benchmark. The G7 nations and Australia also capped Russian oil exports at $60 per barrel. Moscow lambasted the price cap as an attempt to manipulate “the basic principles of free markets,” warning that Russia won't sell oil to those countries that adopt the cap.
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