The target level of the reduction will be reached in the next few days
Russia’s decision to voluntarily cut crude oil production by 500,000 barrels per day will remain in force until the end of June 2023, according to the statement of Deputy Prime Minister Alexander Novak published on the official website of RF Government.
“...Russia maintains its position on the complete rejection of illegal restrictive measures and has voluntarily cut crude oil production by 500,000 barrels per day since March. Today, Russia is close to achieving the target level of the reduction: it will be reached in the next few days. In accordance with the current market situation, the decision to voluntarily reduce production by 500,000 barrels per day will remain in force until the end of June 2023,” reads the statement.
According to Alexander Novak, “today the global oil market is under unprecedented negative pressure from unnatural, man-made factors that create great volatility and uncertainty. These factors include the Western countries’ short-sighted energy agenda aimed at withdrawing investment from traditional energy sectors, imposing illegal restrictions on the free movement of energy goods, and introducing an embargo on the supply of oil and petroleum products. Ongoing attempts to set a price cap are equally dangerous”.
According to Rosstat, Russia’s oil production in November 2022 (before export restriction) was 10.85 million barrels per day.
Alexander Novak earlier characterized the current situation in Russia’s oil sector as stable with Russia having already contracted the supply of petroleum products for the month despite the embargo imposed by the European Union’s member states on February 5.
On December 5, 2022, an embargo on maritime Russian oil shipments to the European Union came into force. G7 nations, the EU and Australia agreed on a price cap for Russian oil delivered by sea, setting the ceiling at $60 a barrel. Moreover, starting February 5, 2023, similar restrictions on deliveries of petroleum products from Russia were enforced as the EU Council officially greenlighted the decision, in conjunction with the G7, to introduce a price ceiling on Russian petroleum products supplied by sea at $100 for premium oil and at $45 for discount.
In February 2023 OPEC+ reaffirmed their commitment to the plan to reduce oil production by two million barrels per day, agreed upon following the meeting on 5 October 2022. Deputy Prime Minister Alexander Novak then said that current oil reserves in the world are below the average five-year values, and there are many uncertainties in the oil market related to the level of supply and demand. China, which is emerging from pandemic restrictions, is expected to increase oil consumption. But inflation expectations for the economies of Western countries remain high, which affects the level of demand for energy.
Those decisions create “considerable risks for the energy security worldwide”.