Russia Will Reduce Oil Production by 500 Thousand Barrels Per Day
According to Deputy Prime Minister Alexander Novak, Russia will carry out a reduction in production voluntarily, which will help “restore market relations.” At the same time, he confirmed the refusal of supplies to those who introduced the price ceiling for oil.
Russia in March will reduce oil production by 500 thousand barrels. per day, said Deputy Prime Minister Alexander Novak, his words were conveyed to RBC by the press service.
“Russia will voluntarily cut production by 500,000 barrels in March. per day. This will contribute to the restoration of market relations,” he said. In further decisions, the country will be guided by the situation on the market, the Deputy Prime Minister said.
In December, Novak assumed that at the beginning of the year, oil production could be reduced by about 500-700 thousand barrels. per day, or by 5-7%. In January, it fell by only 0.4%, from 10.9 million to 10.86 million barrels. per day, the Kommersant newspaper reported. But according to the budgeted forecast, oil production in Russia this year will fall by 8.4%, to 490 million tons (9.8 million barrels per day). And experts from the consulting company Kept (former KPMG) predict that the fall could be 10-15%, to 455-485 million tons.
According to Kommersant, in November, before the introduction of the ceiling and the EU embargo, Russia produced an average of 1.487 million tons (10.9 million barrels) of oil per day. In December, production remained virtually unchanged, amounting to 1.486 million tons per day. In January, according to preliminary data, it only slightly decreased – to 1.481 million tons per day, or less than 0.4% compared to last November.
According to Novak, Russia is now fully selling the entire volume of oil produced, however, as promised, it will not sell it to those who directly or indirectly adhere to the principles of the “price ceiling”. The vice-premier again called the introduction of the latter illegal.
At the end of December, Russian President Vladimir Putin signed a decree on retaliatory measures against the price ceiling mechanism for Russian oil introduced by some countries. It follows from the document that the supply of Russian oil and oil products to foreign citizens and companies is prohibited if the contracts “directly or indirectly provide for the use of the mechanism for fixing the marginal price.” The ban on oil supplies will be in effect for five months, from February 1 to July 1, 2023.
On December 5 last year, the EU embargo on the import of Russian oil began to operate, and from February 5 this year on the import of petroleum products. Since that time, price ceilings have been set for the supply of oil and oil products from Russia to third countries: for oil – $60 per barrel, for light oil products – $100, for dark ones – $45 per barrel.
