Russia has announced a cut in its oil output to blunt the effects of the West’s price cap on its petroleum exports earnings by causing oil contracts to rise.
Brent, the international benchmark, and its United States counterpart WTI, which had been down earlier in the day, jumped more than two percent after Russian deputy prime minister Alexander Novak said production would be cut by 500,000 barrels per day, or five percent of output, in March, Agence France-Presse reports.
Today, we are selling the entire volume of our oil output. But, as we have said before, we are not going to sell oil to those who directly or indirectly adhere to the price cap principles,” TASS quoted Novak as saying on Friday.
The output cut has the effect of narrowing the discount of Russian oil to Brent, UBS analyst Giovanni Staunovo said, according to AFP.
A European Union-wide ban on Russia oil products — like diesel, gasoline and jet fuel — came into effect Sunday alongside a Group of Seven price cap on the same items.
That expanded on the EU embargo on seaborne oil deliveries introduced two months ago — when it also established with G7 partners a $60-dollar-per-barrel cap for Russian exports.
Oil, already bolstered by the reopening of top consumer China after lengthy pandemic restrictions, rebounded further on the news from Novak, who in charge of Moscow’s energy policy.
WITH AFP