Russia will cut oil production by 500,000 barrels per day, or around 5% of output, in March, Deputy Prime Minister Alexander Novak said on Friday, after the West slapped price caps on Russian oil and oil products.
The G7, the European Union and Australia agreed to ban the use of Western-supplied maritime insurance, finance and brokering for seaborne Russian oil priced above $60 per barrel from Dec. 5 as part of Western sanctions on Moscow over its actions in Ukraine.
The EU also slapped a ban on purchases of Russian oil products and set price caps from Feb. 5.
"As of today, we are fully selling the entire volume of oil produced, however, as stated earlier, we will not sell oil to those who directly or indirectly adhere to the principles of the 'price cap'," Novak said in a statement.
"In this regard, Russia will voluntarily reduce production by 500,000 barrels per day in March. This will contribute to the restoration of market relations".
The prices of Brent international benchmark crude rose on the news of the output cuts from Russia, the world's second-largest oil exporter after Saudi Arabia, increasing by more than 2% on the day to $86.36 per barrel.
"Russia believes that the 'price cap' mechanism in the sale of Russian oil and oil products is an interference in market relations and a continuation of the destructive energy policy of the countries of the collective West," Novak said.
Russian oil production defied numerous predictions of a decline amid Western sanctions over Ukraine and rose by 2% last year to 535 million tonnes (10.7 million barrels per day) thanks to a jump in sales to Asia, especially, to India and China.
However, following a raft of new sanctions from the West, Russia is facing more challenges in holding up its production of oil, a key source of revenue for the state budget, Reuters reports.
