Russia may cut oil output by 5-7% early next year, says Deputy PM - Reuters

Reuters reported that Russia's Deputy Prime Minister Alexander Novak estimated a cut of 500,000-700,000 b/d early in 2023 in response to the price cap introduced by the European Union, G7 nations and Australia.

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Russia’s President Vladimir Putin said yesterday, "I think I will sign the decree somewhere on Monday or Tuesday. These are precautionary measures," according to the Russian state news agency TASS.

TASS also mentioned Putin as saying the G7 price cap will not harm Russia’s budget and companies, since it sells oil at similar levels.

Vladimir Putin has repeatedly warned that Russia would halt its crude supply to participants in the price cap. He was quoted by Reuters earlier this month saying, "all of this could lead to a catastrophe in prices and the collapse of the global energy sector at some point. I think this is an ill-conceived and poorly thought-out proposal.”

The price of Russian seaborne oil was capped at $60/bbl on 5 December. This was on top of the embargo on its import by the European Union, the US, Canada, Japan and Britain.

According to International Energy Agency data, Russia underproduced the most in OPEC+, with its November oil output 670,000 b/d below its production quota. A further decline in its oil production is also predicted by the World Bank as a result of European sanctions that will begin on 5 February.

By Konica Bhatt

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