Russia’s oil production will not fall off a cliff now that the EU-G7 price cap on Russian crude has come into effect, Russia’s First Deputy Energy Minister Pavel Sorokin said on Thursday.
“Most markets are available for our oil based on adequate market principles, while any fluctuations in oil production that may occur, are not critical and will not exceed those registered in the spring,” Sorokin told reporters in Moscow today, as carried by Russian news agency TASS.
Russian oil output dipped in the spring immediately after the Russian invasion of Ukraine, but later stabilized by June. Still, Russia is estimated to have been around 1 million barrels per day (bpd) below its OPEC+ oil production quota since then.
Analysts expect a further decline in Russian output due to various hurdles for its exports now that the $60 a barrel price cap is in place.
Russia’s central bank has said that the price cap could result in another shock to the Russian economy. Commenting on this, Sorokin said, “It should be noted here that the analysis presented in the publication contained a remark saying that the opinion of experts may not coincide with the regulator’s view.”
“Overall, we do not share the opinion that the introduction of a price cap is an event that will lead to major consequences for the Russian economy,” he added.
Earlier this week, Deputy Prime Minister Alexander Novak – who is in charge of Russia’s oil policy and attends the OPEC+ meetings – said that Russia may have to reduce its oil production due to uncertainties, but noted that the “decline will not be very significant.”
As of October, Russia had yet to find markets for an additional 1.1 million bpd of crude and 1 million bpd of diesel, naphtha, and fuel oil which will be banned in Europe by early February, the International Energy Agency (IEA) said in its Oil Market Report in November.
“For crude oil, no significant buying from Russia outside China, India, and Türkiye has appeared despite massive discounts. A further rerouting of trade should help ease pressures but a shortage of tankers is a major concern, especially for ice-class vessels required to load out of Baltic ports during winter,” the agency added.
By Tsvetana Paraskova for Oilprice.com
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