The European Union played down the impact of Russia’s oil output cut, saying it was forced on Moscow by sanctions related to its invasion of Ukraine.
“It was not voluntary,” EU Energy Commissioner Kadri Simson said in an interview in Cairo. “It was forced upon them. They don’t have the ability to sustain the production volumes because they don’t have access to the necessary technology.”
Sanctions have restricted Russia’s ability to find buyers for the 10.9 million barrels a day it was pumping by the end of 2022, Simson said, adding that the giant producer is struggling even after accepting deep discounts.
Brent crude rose on Friday after Deputy Prime Minister Alexander Novak said Russia would cut production by 500,000 barrels a day next month. That extended the benchmark’s weekly rise to 8.1%, the most in about four months. Still, it clawed back some of its gains on Monday, falling to around $86 a barrel as the dollar strengthened.
Simson said Russia’s move, which follows an EU ban on imports of almost all refined and crude fuels from Moscow and a G7 price cap, is unlikely to boost oil in the long term.
Russia’s crude oil production and exports have proven resilient to several waves of Western sanctions, according to industry data seen and analyzed by Bloomberg. While the nation had to cut production in the weeks following last February’s invasion to just over 10 million barrels a day, it recovered by the end of the year.
The EU Energy Commission will publish an assessment later this month on the bloc’s ability to replenish natural gas ahead of next winter. It managed to quickly replenish its storage before this winter, even as Russia cut pipeline gas flows in retaliation against the sanctions. This was partly due to increased purchases of liquefied natural gas in the US and other nations.
While Russia still sends some gas to Europe via pipeline, those volumes could drop further, Simson said.
“Our crisis strategy, of course, is based on the assumption that they will completely reduce these deliveries,” Simson said.
