Russia may reduce its oil output by 500,000-700,000 barrels a day in early 2023 in response to the Group of Seven’s price cap on the nation’s crude exports, according to Deputy Prime Minister Alexander Novak.

“We are ready to partially cut our production early next year,” he said, adding the volumes equate to roughly 5%-6% of what Russia’s now pumping.

Although Novak described the amount “insignificant”, a cut of this size could still tighten the global oil market at a time when many analysts are forecasting a demand recovery in China.

Moreover, Russia will also ban crude oil and petroleum product supplies to countries and legal entities seeking compliance with the price cap, Novak said. A corresponding decree is now being prepared as a response to the price cap, he noted.

This week, EU nations also agreed on a gas price cap of €180 per megawatt hour in all European hubs. The restriction is set to take effect on 15 February.

EU agrees on €180/MWh gas price cap

European Union energy ministers agreed on Monday to set a gas price cap of €180 per megawatt hour (MWh).

The Czech Presidency of the European Council submitted a proposal for a €188/MWh price cap, after the European Commission’s previous proposal of €275/MWh was rejected as too high.

Earlier, Hungarian Foreign Minister Péter Szijjártó said the country would vote against the gas price cap because it believes it is a extremely bad measure that is dangerous for Europe and could endanger European energy supplies, as Gazprom has already warned that it would simply cut gas supplies if the price is capped.

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