Crude oil prices are up more than 2% today after Russia said it planned to reduce crude production by 500K bpd in March.
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 decision comes after Europe implemented a ban on Russian oil products on Feb. It likely means they're having a hard time finding destinations for diesel cargoes.
"We believe the decision is not completely a voluntary one ... as market factors likely forced the Russian side to make this decision," said UBS analyst Giovanni Staunovo.
For now, the cuts are only for March but developments will be worth watching closely. Russia is facing heavy sanctions for the war in Ukraine and the cuts could also be a sign that parts and technology are in limited supply. It could also mean they want to put a squeeze on the world oil market and the countries participating in the Russian oil price cap.
In any case, it's worth watching closely especially with all signs pointing to an imminent escalation in the war.
In terms of price, famed oil trader Pierre Andurand is out today talking about $140 oil later in 2023 on China demand. He warned that it could boost global demand by as much as 4 million barrels per day.
