Russia says may cut oil output following price cap

MOSCOW, Russia  -Moscow could cut oil production by up to 7 percent in early 2023 following an oil price cap agreed by Western countries, a Russian deputy prime minister said Friday.

“At the start of next year, we could make a reduction of 500,000-700,000 barrels per day. For us, that’s around 5-7 percent,” Alexander Novak, who is in charge of Moscow’s energy policy, said according to Russian news agencies.

He said Russia will not supply oil to countries that are enforcing a price cap — a part of punitive measures on Moscow following its offensive in Ukraine.

The price ceiling of $60 per barrel agreed by the European Union, G7 and Australia came into force in early December and seeks to restrict Russia’s revenue while making sure Moscow keeps supplying the global market.

Introduced alongside an EU embargo on seaborne deliveries of Russian crude oil, the cap aims to ensure Russia cannot bypass the embargo by selling its oil to third countries at high prices.

Russia has said the cap will not affect the Ukraine offensive and expressed confidence it would find new buyers.