Page 4 - FSUOGM Week 07 2023

FSUOGM COMMENTARY FSUOGM

Russia slashes oil output by

500,000 bpd in response to

Western price caps

Moscow has followed through on its threat to retaliate against Western price

caps on its oil and petroleum products.

RUSSIA RUSSIA’S government has announced a cut in “As of today, we are fully selling the entire vol-
oil production of 500,000 barrels per day in retal- ume of oil produced, however, as stated earlier,
WHAT: iation to new Western caps and embargoes on we will not sell oil to those who directly or indi-
Russia’s government will its petroleum products, triggering a rebound in rectly adhere to the principles of the ‘price cap’,”
cut oil supply by 500,000 global oil benchmarks. Novak said in a statement. “In this regard, Russia
bpd next month. The output – equivalent to around 5% of Rus- will voluntarily reduce production by 500,000
sian oil output – will come into force in March, bpd in March. This will contribute to the resto-
WHY: Russian Deputy Prime Minister Alexander ration of market relations.”
The move is a retaliation Novak announced on February 10. It will only The Kremlin had said on February 10 that
against the latest price apply to crude oil and not gas condensate. Russia had discussed its decision to cut output
caps imposed by the The EU and G7 imposed two separate caps on with some OPEC+ members. But Novak said
EU and G7 on Russian different Russian petroleum products on Febru- that Moscow had held no formal consultations
petroleum products. ary 5 based on their market value, in a further with other producers as the production was
effort to strangle Moscow’s revenue stream from voluntary.
WHAT NEXT: hydrocarbon exports. The move, which coin- OPEC+ plans no action in response to Rus-
The latest price caps are cided with the EU’s introduction of an embargo sia’s reduction in supply, oil cartel delegates told
set to hit harder than the on seaborne imports of the products, came two Reuters.
oil price cap imposed in months after a similar Western price cap and The price caps are aimed at limiting how
December. embargo was slapped on Russian crude supplies. much Russia can earn from its oil and oil

P4 www. NEWSBASE .com Week 07 15•February•2023