"Today, we are fully selling the entire volume of oil produced, however, as previously stated, we will not sell oil to those who directly or indirectly adhere to the principles of the "price ceiling," he said.
"In this regard, Russia will voluntarily reduce production by 500 thousand barrels per day in March. This will help restore market relations," Novak added.
Since the announcement this morning, the price of Brent Crude predictably surged, rising to $86.521/bbl, with April and May futures contracts closing as high as $86.59/bbl, but June and July only rising to $85.55/bbl and $84.94/bbl respectively.
The objective is fairly obvious: curtail production to force world oil prices up to a level where the $60/bbl price cap is no longer sustainable. With Urals Crude trading at a $28.47/bbl discount to Brent crude, Russia has to push the price of Brent to at least $90/bbl to put serious pressure on the cap, which it has already done briefly.
Yep. The worldwide potential supply capacity really isn't much greater than existing demand so there is a limit to the gap between Brent and the price for Urals. It's a contest of between how much economic pain can Russia endure vs the requirements of the most import dependant of the sanctioning nations.
Russia Pushes Back, Cuts Oil Production
Yep. The worldwide potential supply capacity really isn't much greater than existing demand so there is a limit to the gap between Brent and the price for Urals. It's a contest of between how much economic pain can Russia endure vs the requirements of the most import dependant of the sanctioning nations.