Monitoring Desk
MOSCOW: Russia’s Deputy Prime Minister Alexander Novak on Friday said that the country may cut oil production by 5 to 7 percent in early 2023 as a response to price caps on its refined products and crude and halt sales to the countries that support the price caps.
For the first time, detailing the Russian response to the West’s price caps introduced over Moscow’s invasion of Ukraine, Alexander Novak told state television that the oil cuts could reach 500,000-700,000 barrels per day.
The Russian leader also said that despite Europe’s efforts to reduce reliance on Russian gas and oil, energy exports from Russia are increasing worldwide, and Moscow has been diversifying its buyers.
Novak said it would be easier to provide for global economic development with Russian energy and forecasted possible gas shortages in Europe, which has introduced restrictions on oil and gas prices.
Russian oil price cap
On oil, Australia, the European Union, and G7 nations introduced a $60 per barrel price cap from December 5, 2023, in addition to the embargo placed by the European Union on imports of Russian crude through sea and similar pledges by the United States, Britain, Canada, and Japan.
“We think that in the current situation, it is possible to face risks of reduced output rather than be guided by the price caps selling policy. Currently, it is $60, tomorrow it can be anything, and depending on some decisions of the unfriendly countries are unacceptable for us,” Novak said.
Russian President Vladimir Putin stated that he would issue a decree on Moscow’s actions in response to the price cap early next week.
The deputy prime minister said the decree would ban sales of oil products and oil to countries that support the price cap and companies demanding its observance.
Novak also said that Russian oil output is expected to increase this year to 10.7 million barrels per day (535 million) from 524 million tonnes earlier in 2021, while natural gas production will fall to 671 billion cubic meters.
