Russia may cut oil output by 5% to 7% at the start of next year, Russian Deputy Prime Minister Alexander Novak told Russian state television channel on Friday, detailing a concrete threat of a production cut for the first time.
“We are ready to partially reduce our production, and this may happen, I assess the risk, let’s say at the start of next year we could have a reduction of 500,000-700,000 barrels a day, for us that’s about 5-6, 5-7%t. This is an insignificant amount, but nevertheless the risks are there,” Novak said in an interview with Russia 24.
That production cut may be necessary, Novak said, because a presidential order is being prepared that includes a ban on the delivery of oil and oil products to countries that impose European Union’s price caps.
“As far as the price cap is concerned, a presidential order is being prepared, it’s almost ready for release. That order will include a ban on the delivery of oil and oil products to those countries and legal entities who will require compliance with the European Union’s price cap in their contracts,” Novak said.
The prices of Brent crude prices were up by 3.6% on Friday, recording its highest level in three weeks.
Earlier this month, the European Union, along with the G7 and Australia, approved a price cap on Russian oil at $60 a barrel. The European Union also prohibits Russian crude oil imports by sea, designed to limit the Kremlin’s revenues.