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With this reduction in oil production ordered by the Russian president, commodity prices have fallen in recent weeks, pressured by fears of a slowdown in the world economy and demand, but they may rise again soon
The president of Russia, Vladimir Putin, declared that he will reduce the production of Russian oil in the year 2023, due to an imposition of the price ceiling of Russian oil by Europe and other Western countries, according to the deputy prime minister. -Minister Alexander Novak. With this reduction in oil, Russia would produce about 500.000 to 700.000 barrels a day next year.
According to Novak, this reduction in oil production, going from 500.000 to 700.000 barrels per day, would be approximately 5 to 7% of the total production.
The motivation for President Vladimir Putin's decision came after the 27 countries of the EU (European Union), the G7 and Australia announced a ceiling on the price of oil from Russia, transported from ships.
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RUSSIAN OIL PRICE CEILING
Russian product restrictions
With the imposition of Western countries, only the oil passed on by Moscow at a price equal to or less than US$ 60 dollars may continue to be delivered to countries in Europe, G7 and Australia.
The purpose of imposing the oil price cap is to achieve the profit that Moscow was making with the acquisition of hydrocarbons and, directly, undermining the military intervention in Ukraine made by President Vladimir Putin.
The “ban” on the purchase of products from Vladimir Putin's Russia does not stop there, Western companies are also restricted from providing some of the services that allow the transport of oil, such as freight or insurance.
Oil price coming and going
Due to the imposition of President Vladimir Putin to reduce oil production, commodity prices have plummeted in recent weeks, in the face of a possible slowdown in the world economy due to the demand for oil. However, this stability in the price may soon pass, since in the coming months the tendency is for the price to increase, according to Rabobank in a report.
The phenomenon described above is called backwardation, which means that the future price of the product is less than the current price of the same product. Faced with a situation like this, investments in the sector are discouraged in order to increase supply, which happened in the oil sector.
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