Dubai: Oil jumped after Russia said it plans to cut March production by 500,000 barrels a day.
Brent crude climbed as much as 2.6 per cent in London to trade above $86 a barrel, erasing an earlier decline, while West Texas Intermediate moved above $80 a barrel. The move is the first major indication of an impact on Russian production since a swath of sanctions was placed on the country’s output over the last three months.
Russia’s production cut will be voluntary and is a response to western price caps, Deputy Prime Minister Alexander Novak said in a statement. The country is able to sell its oil volumes and it does not want to adhere to price restrictions imposed by western nations.
“Russia will turn the oil market from a buyer’s market to a seller’s market,” said Bjarne Scieldrop , chief commodities analyst at SEB AB. “That should remove the crude oil rebate on Russian crude which now plagues Russian oil income.”
Prior to the announcement of the cut, crude was already on track for its biggest weekly advance since mid-January. A host of bullish drivers emerged this week, as Saudi Arbaia showed confidence in China’s oil demand recovery by lifting its prices, while there have been disruptions in Turkey, Norway and Kazakhstan.
