Exclusive: Russia plans oil export cuts in March, sources say

MOSCOW/LONDON, Feb. 22 (Reuters) – Russia plans to cut oil exports from its western ports by up to 25% in March from February, surpassing announced production cuts in a bid to drive prices for its oil increase, three sources in the Russian said the oil market.

The Russian Ministry of Energy declined to comment. Russia’s pipeline monopoly Transneft did not immediately respond to a Reuters request for comment.

Russia had already announced plans to cut its oil production by 500,000 barrels per day in March, representing 5% of its production or 0.5% of world production.

Russian officials said voluntary production cuts in March would last a month and follow the start of Western price caps on Russian oil on December 5 and on oil products on February 5. The reduction will be implemented from January production levels.

Russia has so far managed to divert most of its oil exports from Europe to India, China and Turkey, which have happily picked up cheap barrels and ignored Western sanctions.

But Moscow is struggling to divert refined product exports from Europe after Indian, Chinese and Turkish refineries flooded the market with fuels produced from Russian oil.

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US Treasury officials have said Russia’s decision to cut oil production reflects Russia’s inability to sell all of its oil.

Washington has said it has pushed for the introduction of price caps to limit revenues for President Vladimir Putin’s war in Ukraine, but set them high enough to prevent a further spike in global oil prices.

“The export restrictions seem to go deeper than the planned production restrictions. It could help push up the price of Russian oil,” said one of the sources.

The G7 group of industrialized countries has agreed to a price cap for Russian oil of $60 a barrel.

Russian oil has been trading below levels in recent weeks due to deep discounts and expensive freight rates. Global Brent benchmark prices are trading at over $80 a barrel.

Putin and other Russian officials have said they would refuse to sell oil to countries that adhere to the limits and promised to take steps to reduce the rebates.

The first source said Transneft had informed at least two oil companies that they would be allocated 20-25% fewer cargoes from western ports in March than they had requested.

The reductions from the ports of Primorsk and Ust-Luga on the Baltic Sea and Novorossiisk on the Black Sea will be a quarter of February’s volumes, although some adjustments can still be made, another source said.

“There are no plans to reduce exports from the Pacific,” said the first source.

Russia normally exports up to 10 million tons per month or 2.5 million barrels per day of Ural crude oil from Primorsk, Ust-Luga and Novorossiisk and a 25% cut would represent as much as 625,000 barrels per day if confirmed by Transneft and approved by oil companies.

Reporting by Reuters; Edited by Kirsten Donovan and Bernadette Baum

Our Standards: The Thomson Reuters Principles of Trust.


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