Oil prices climb after Russia announces production cut of 500,000 barrels per day in March

Crude prices jumped on Friday after Russia announced a retaliatory move against western price caps with a plan to reduce oil output by 500,000 barrels per day in March.

Price action
  • West Texas Intermediate crude for March delivery 

    climbed $1.91 or 2.4%, to $79.97 a barrel. The contract fell 0.5% to $78.06 a barrel on the New York Mercantile Exchange Thursday.

  • April Brent crude 

     the global benchmark, climbed $2, or 2.3%, to $86.46 a barrel, after falling 0.7% to $84.50 a barrel on ICE Futures Europe Thursday.

  • March gasoline 
    rose 1.7% to $2.4896 a gallon, while March heating oil 
    rose 3% to $2.90 a gallon.

  • March natural gas 
    climbed 1.1% to $2.4580 per million British thermal units.

Market drivers

In a statement on Friday, Russian Deputy Prime Minister Alexander Novak said price ceilings that had been imposed by Western governments were “an interference in market relations and a continuation of the destructive energy policy of the countries of the collective West.”

The European Union banned imports of seaborne Russian oil and oil products and, together with the Group of Seven, adopted price caps for seaborne Russian oil and oil products that took effect last last year. Western governments have largely banded together to punish Russia for its invasion of Ukraine nearly a year ago.

Read: Zelenskyy wraps up European tour to rally support with visit to EU summit

“As one of the steps to level the threat to the global oil market, Russia has introduced a ban on directly or indirectly using references to any illegitimate restrictions in oil supply contracts,” Novak said.

“To date, 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 added.

Read: Why U.S. fuel prices continue to feel the effects of Russia’s invasion of Ukraine

Some observers said the price cuts were a sign that Russia may be having trouble unloading its energy products.


Oil prices have seen an impressive run of gains recently that halted on Thursday. Still, U.S. crude is looking at a 9% gain for the week and Brent nearly that much as of Thursday, according to FactSet. The gains have been driven in part by hopes surrounding China’s reopening.

“The assumption, once they began removing restrictions, was that the first quarter or two would be tough but the second half of the year would see growth unleashed backed by fiscal and monetary measures. Now it would appear those expectations are being brought forward which should stimulate demand for oil and other commodities,” said Craig Erlam, senior market analyst at OANDA, in a note to clients.

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