Oil prices rose sharply on Friday after Russia’s deputy prime minister, Alexander Novak, said that his country would cut production in March by 500,000 barrels a day — or about 5 percent of its output.
Russia is the world’s third-largest producer of oil, and the announcement by Mr. Novak, who is the Kremlin’s point person on energy, immediately sent prices upward. Futures for Brent crude, the international benchmark, rose 3.4 percent to $86.47 a barrel. West Texas Intermediate rose similarly, briefly rising above $80 a barrel.
Mr. Novak portrayed the move as one designed to hit back at the Western price cap of $60 a barrel imposed on Russian oil in December. According to the Russian news agency Interfax, he told reporters, “we will not sell oil to those who directly or indirectly adhere to the principles of the price cap,” a statement often repeated by Mr. Novak and President Vladimir V. Putin. The production cut, Mr. Novak said, would “contribute to the restoration of market relations.”
He also appeared to counter the idea that Russia is having trouble finding buyers for its crude. “Today, we are fully selling the entire volume of oil being produced,” Interfax quoted him saying.
But analysts said that the announcement could be an indication that Russia is worried about the increasing difficulties of selling its oil because of recently imposed sanctions.
“Russia might be feeling that more and more countries are going to start attempting to use the price cap scheme,” said Felix Todd, an analyst at Argus Media, a pricing data firm.
Mr. Novak may also be trying to raise the price Russia is receiving for its oil by limiting supplies. In recent weeks, there has been an abundance of Russian crude, giving buyers leverage to extract discounts of as much as $40 a barrel on Russia’s most important crude grade, Urals, according to Argus Media.
If there is less Russian crude available, buyers may be forced to settle for a smaller discount.
Following the invasion of Ukraine, Russia’s oil output has held up better than many analysts expected. Russian companies found markets in India, Turkey and elsewhere to compensate for the loss of their key customers in Europe. But Russia has begun to collect less money from its oil sales. Late last year, the Kremlin conceded that oil revenues, a critical part of its budget, would become “less predictable” in the future.
In December, the European Union imposed an embargo on most Russian crude on the same day the Group of 7 nations imposed its price cap on Russian oil sold to other countries. And this week, a price cap and a European embargo went into effect on refined oil products from Russia, like diesel and gasoline.
Any reduction of oil supplies risks lifting prices in a global market that is concerned about the potential for rapidly increasing demand from China, the world’s largest oil importer, now that Beijing has lifted Covid restrictions.