World oil prices have soared following Russia’s announcement of its planned hefty output cuts in February.
Brent crude increased by 2.6% on the London Stock Exchange earlier in the day to trade above $86 per barrel, while West Texas Intermediate moved above $80 a barrel.
This comes after Russian Deputy Prime Minister Alexander Novak told reporters that Moscow “will voluntarily cut production by 500,000 barrels per day in March,” a decision that he said would “contribute to the restoration of market relations.”
He added that when making further decisions, the government would proceed from the current market situation.
Novak also warned that introducing price caps on Russian oil and oil products is fraught with negative consequences for the global economy. Trade restrictions imposed by Western countries may further lead to supply shortages and higher prices for these products.
“Russia believes that the price cap ceiling mechanism […] is an interference in market relations and a continuation of the destructive energy policy pursued by the collective West. In the future, it may not only lead to a decrease in investment in the oil sector and, accordingly, an oil shortage, but also spread to other sectors of the world economy with similar consequences,” the Russian deputy prime minister underscored.
The remarks followed the EU's ban on the import of Russian petroleum products coming into force on February 5 as part of last year's Western sanctions package against Russia.
Western countries have been seeking ways to limit Russia's income from oil and gas exports, as well as scrap their dependence on Russian fuel since the beginning of Moscow’s special military operation in Ukraine.
In December, the EU, G7 nations and Australia imposed a $60 per barrel price cap on Russian oil, which went into effect on December 5 and will be reviewed every two months to remain at 5% below the International Energy Agency benchmark. Moscow has repeatedly denounced the oil price cap as unacceptable, underlining that the country will never agree to this destruction of market pricing.