Russia may reduce oil production in response to sanctions

Russian Deputy Prime Minister Aleksandr Novak said that they could reduce oil production in the first months of 2023 in response to the G7’s price cap implementation. Novak also said that a decision would be made next year on establishing a natural gas distribution center in Turkey. In an interview with Rossiya-24, Novak stated that they were ready to reduce production early next year, saying, “We can reduce oil production by 5-6 percent.” In his speech, Novak reiterated Russia’s statement that it would not sell oil to buyers who applied price caps, and shared his estimate that oil production would reach 535 million tons this year. This is equivalent to approximately 10.74 million barrels of daily production. According to data obtained by Bloomberg, Russia’s daily oil production reached an eight-month high of 10.9 million barrels in November. Novak also said that a decision would be made next year on establishing a natural gas distribution center in Turkey. Russian President Vladimir Putin announced yesterday that he would sign a decree next week detailing Moscow’s response to the price cap. In response to the war in Ukraine, the G7 and European Union countries agreed to impose a $60 per barrel cap on oil transported by sea from Russia to reduce the Kremlin’s oil revenues. In the first week of the ban, seaborne exports from the country fell by 54 percent to 1.6 million barrels per day. According to sources familiar with the matter, Russia will monitor the effects of the price cap in the first quarter and evaluate how it will respond.