Russia to Cut Oil Output by 500k Barrels a Day

Improve the News Foundation -

Facts

  • On Friday, Russia's deputy prime minister announced plans to cut oil production by 500k barrels per day — roughly 5% of output — starting in March amid economic sanctions imposed on the country by the West.1
  • The most recent sanctions include last week's EU-imposed ban on Russian diesel fuel and other refined oil products, and a cap of $100 per barrel on petrol, diesel, and jet fuel agreed by the Group of Seven (G7) countries.2
  • The G7, the EU, and Australia previously agreed to a $60-per-barrel cap on Russian seaborne oil shipped through Western operators or insurers in December.3
  • The cuts come as the International Energy Agency forecast last month that global demand for oil could jump by 1.9M barrels per day to reach a record high of 101.7M barrels per day this year, with China — having recently reopened its economy following the pandemic — accounting for almost 50% of the increase.3
  • OPEC+ — which agreed to limit oil output to 2M barrels a day last year —  signaled it won't take any action to fill in the gap created by Russia.4
  • Following the announcement, Brent crude oil prices jumped at least 2.2% on Friday, reaching $86.34 a barrel by mid-morning.5

Sources: 1Reuters, 2Itn, 3CNN, 4Associated Press and 5Washington examiner.

Narratives

  • Anti-Russia narrative, as provided by Pbs newshour. This is just the latest facet of Putin's energy blackmail following his failed attempt last year to weaponize natural gas. Europe did suffer from high natural gas prices but managed to replace much of the loss from other sources, and prices have since come down. Russia's attempt to pull another stunt like that will most likely fall flat.
  • Pro-Russia narrative, as provided by RT. Amid repeated warnings of such a move — that clearly fell on deaf ears — in the case of further price ceilings, this should come as no surprise: It's a natural response to restore market relations following the West's destructive disruptions that upset the volatile global oil market.