Russia extended the decision to cut oil production until July

In March, RUSSIAreduced production "voluntarily" by 500 thousand barrels. per day. Now, Novak said,

The decision to voluntarily reduce oil production in Russia by 500 thousand barrels. per day will be valid until June 2023 inclusive. This was announced by Deputy Prime Minister Alexander Novak, his words were conveyed to RBC by the press service.

In early February 2023, Novak announced that in March Russia would “voluntarily” cut production by 5%, or 500,000 bbl. per day. The decision was made against the background of the EU embargo on Russian oil and the introduction of a price cap.

According to Novak, today the oil market continues to be "under unprecedented negative pressure from unnatural man-made factors", creating great volatility and uncertainty. These factors include the "short-sighted" energy policy of Western countries, "aimed at depriving the traditional energy sectors of investment and imposing illegal restrictions," the deputy prime minister said.

He also stressed that Russia maintains its position on the complete rejection of illegal restrictive measures, in connection with which it was announced to limit production in the amount of 500 thousand barrels. per day since March of this year.

“At the moment, Russia is close to achieving the target level of reduction - it will be reached in the coming days. In accordance with the current market situation, the decision to voluntarily reduce production in the amount of 500 thousand barrels. per day will be valid until June 2023 inclusive,” Novak said.

After the start of the Russian special operation in Ukraine, Western countries decided to cut Moscow's revenues by imposing an embargo on energy exports. On December 5, 2022, the EU embargo on the import of Russian oil began to operate, and on February 5, 2023, on the import of petroleum products. Since that time, price ceilings have been set for the supply of oil and oil products from Russia to third countries: for oil - $60 per barrel, for light oil products - $100, for dark ones - $45 per barrel.

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Russia, in response, banned the supply of its oil and oil products to foreign citizens and companies if the contracts directly or indirectly provide for the use of a price cap mechanism.

Against the background of the embargo, Russia's revenues from oil and gas exports in January 2023 fell by 38% compared to the same month last year. Last month, they amounted to $18.5 billion, while in January 2022 they reached $30 billion, according to the data of the International Energy Agency (IEA). “We expect the decline in [Russia's] oil and gas revenues to be sharper in the coming months. And even more dramatic in the medium term due to the lack of access to technology and investment,” said Fatih Birol, Executive DIRECTOR of the IEA.

At the end of February, President Vladimir Putin signed a law on changing the procedure for calculating the price of oil for taxing oil companies. Now, when calculating taxes from July 2023, the quotes for Russian Urals oil must be no lower than the cost of Brent minus $25 per barrel. The application of this formula will allow the budget to receive an additional 600 billion rubles this year, the Ministry of Finance noted.