Is oil the Achilles heel in the Russian economy?
2:46
London (CNN) --
Russia will cut crude production by half a million barrels a day starting in March, just over two months after the world's major economies imposed a price cap on the country's maritime exports.
"We will not sell oil to those who directly or indirectly adhere to the price ceiling principles," Russian Deputy Prime Minister Alexander Novak said in a statement.
"In connection with this, Russia will voluntarily reduce its production by 500,000 barrels per day in March. This will contribute to the restoration of market relations."
The cut is equivalent to approximately 5% of Russian oil production.
Global benchmark Brent crude futures rose 2.7% on the news Friday morning to as high as $86 a barrel as traders anticipated a tightening of global supply.
According to Reuters, Russia made the decision to cut production without consulting the OPEC+ producer group, which includes Saudi Arabia.
OPEC+ decided in October to cut production by 2 million barrels per day and has not adjusted that position since.
advertising
Latest-minute and live news from Russia's war in Ukraine
In June last year, the European Union agreed to cut off all maritime imports of Russian crude for the next six months, as part of unprecedented Western sanctions aimed at reducing Moscow's ability to finance its war in Ukraine.
To further tighten the screws, the G7 countries and the European Union agreed in December to limit to $60 a barrel the price at which Western brokers, insurers and shippers can trade Russian seaborne oil to other markets.
At the beginning of the month, EU countries also banned imports of diesel and refined petroleum from Russia.
Novak warned that limiting the price of crude could cause "a decrease in investment in the oil sector and, consequently, a shortage of oil."
Russian Ural crude was trading at a discount to Brent crude by $28 a barrel as of Friday morning.
India and China have stocked up on cheap oil from Moscow in recent months, while the EU, once the biggest customer of Russian crude, has halted all imports.
Navalny's daughter: Russia is slowly killing my father 1:02
A possible drop in global oil supply could come at a sensitive time.
The rapid reopening of the Chinese economy in December, after nearly three years of strict coronavirus restrictions, has boosted estimates of global oil demand.
Last month, the International Energy Agency said it expected global demand to rise by 1.9 million barrels per day to a record high of 101.7 million barrels per day, with China accounting for nearly half of the increase.
Western sanctions, added to the cost of the war, are weighing on the Russian economy.
The country's budget deficit soared to $45 billion last year, 2.3% of its gross domestic product.
News from RussiaOil
