Russia could cut oil production by 5% to 7% early next year as it responds to Russia’s oil and crude product price cap by halting sales to countries that support the cap, the deputy announced. Prime Minister Alexander Novak on public television Friday . reports Reuters.
Russian oilPhoto: Dmitrii Melnikov / Alamy / Alamy / Profimedia
Describing Russia’s response to the cap for the first time, Novak said production cuts could go as high as 500,000-700,000 barrels per day (bpd).
EU countries have been major buyers of Russian crude for decades, but an EU embargo on Russian oil imported by sea came into force on 5 December. Furthermore, in coordination with the G7 states and Australia, the EU countries have finalized an agreement which provides for the price of oil that Russia will deliver to third countries to be fixed at 60 dollars a barrel, a measure which will be applied by imposing it on companies that provide shipping services or insurance for the delivery of this oil.
On Thursday, Russian President Vladimir Putin announced that he would issue a decree next week outlining Moscow’s response to the cap.
Novak explained that the decree will ban the sale of Russian petroleum products and crude oil to countries that support this limit and to companies that require compliance with it.
The EU will have to replace Russian crude with oil from the Middle East, West Africa and the United States, which should stem the collapse in oil prices, at least in the short term, Ann-Louise Hittle, Vice-President recently said by Wood Mackenzie. ‘Prices are currently falling due to expectations of a slowdown in demand, despite decisions by the EU and the G7. Adjustments to the EU embargo on Russian oil are likely to temporarily support prices,’ Hittle added.
On the ICE Futures exchange, the price of a barrel of North Sea Brent oil for February delivery fell $1.22 on Thursday to close at $80.89. (source Agerpres)
