Russia oil profits fall as West’s cost cap begins to bite

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Russia revealed that it would cut oil production by 500,000 barrels daily in March after the West slapped cost caps on Russian oil and oil items.

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The International Energy Agency on Wednesday stated Russia’s oil export profits fell dramatically in February, triggered by restrictions and cost caps developed to cut President Vladimir Putin’s capability to fund the war in Ukraine.

The IEA stated Russia’s approximated oil export profits was up to $116 billion last month, down $2.7 billion from January when volumes were substantially greater.

“It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions. Revenues are already dwindling,” the group stated in its newest oil market report.

The energy firm stated, mentioning the Russian financing ministry, that Moscow’s financial invoices from oil sales were simply 45% of the level from a year previously.

The newest figures come quickly after the IEA stated in mid-February that the West’s oil war versus Russia seemed having the “intended effect” regardless of remarkably resistant production and exports in current months.

Ukrainian authorities and advocates have actually formerly required Western policymakers to increase the monetary pressure on Russia by targeting its oil profits in order to assist Kyiv dominate.

The European Union’s embargo on Russian oil items entered result onFeb 5, developing on the $60 oil cost cap executed by the Group of Seven significant economies onDec 5. The latter step likewise accompanied a relocation by the EU and U.K. to enforce a restriction on the seaborne import of Russian petroleum.

Asked on Tuesday whether he was worried in 2015 that the Russian economy may have collapsed due to global sanctions, Putin stated he had actually been fretted however that Russia’s “economic sovereignty” now was a significant outcome. The structures of Russia’s financial stability were “stronger than anyone thought,” he included.

Putin stated Russia’s monetary system had actually got more powerful which Western business that left Russia in 2015 believed the economy would collapse “but it didn’t.”

OPEC is more concerned about supply stability than seasonality of oil prices, consultancy says

— CNBC’s Holly Ellyatt added to this report.

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