Russia Introduces A 5% Cut To Its Oil Output In Response To Western Sanctions.
It seems that the Western sanctions are finally biting back on Russia as the country announced a 5% cut to its oil output. This means a reduction of almost 500000 barrels per day which is around 5% of what Russia produced in January.
This comes at a time when Western countries imposed sanctions on Russian oil imports. There's one group that believes that Russia has announced this measure due to the Western sanctions.
But there are also some analysts who believe Russia has taken this move due to the low demand for oil. Another scenario is that maybe it is a little bit of both - Western sanctions as well as decreased demand.
Russia Struggling To Find New Buyers
According to analysts, it has become difficult for Russia to find buyers for its oil products. And the EU ban on various refined products from Russia has further intensified the situation.
Before the 5th December ban on Russian fuel, the EU countries were loading up their inventories with Russian crude oil. But after the price cap, a sudden fall in Russian exports towards the EU was witnessed.
According to available data, the seaborne crude exports of Russia were at a 2-year low during December 2022.
In Russia, Vladimir Putin has already criticized the oil price cap introduced by the Western countries and called it stupid. In fact, Putin also highlighted three different options through which the country can fight back!
After the news from Russia, a 2% jump in the prices of oil futures was witnessed. However, these gains turned out to be short-term and reversed quickly.
At the end of the day, Russia is a major player in the crude oil market, and Western countries can't just take Russia out of the equation. In fact, more oil cuts from Russia will further disturb the crude oil market and may send the prices soaring higher!