After major economies set a price cap on oil products, Russia will reduce its crude oil production by 500,000 barrels per day starting in March.
After Russian deputy prime minister Alexander Novak announced the cut, oil prices increased.
The prices that the European Union, G7 countries, and Australia will pay for refined goods and oil have been capped.
These are a part of the western sanctions meant to pressure Russia over its involvement in the war in Ukraine.
One of the world's biggest producers of oil is Russia. Due to its planned cuts, Brent crude, the global standard for oil prices, rose by 2.2 percent to $86 per barrel.
In an effort to reduce the Kremlin's profit from sales and its ability to finance the war, Western nations have been imposing tougher oil sanctions on Russia as its invasion of Ukraine continues.
Most recently, this week saw the implementation of an EU ban on seaborne imports of refined oil products, like diesel, from Russia. Access to tanker fleets and insurance markets are restricted for traders who do not abide by these sanctions.
With regard to the oil price cap, nations ceased using maritime insurance, financing, and brokering services from the West on December 5 for Russian oil transported by sea that was priced over $60 per barrel.
Russia's response has been to forbid any agreements involving the cap.
As of right now, we are selling all of the oil that was produced, according to Mr. Novak, but we won't sell oil to anyone who supports the 'price cap' either directly or indirectly, as was previously stated.
In this respect, Russia will voluntarily cut production in March by 500,000 barrels per day. This will help the market relations get back on track.
Despite the sanctions, Mr. Novak claims that Russia has been able to sell all of its production thus far.
Hundreds of tankers have been purchased by companies in recent weeks, according to industry sources, creating a so-called "dark fleet" ready to transport Russian crude at higher prices.
The last significant decline in Russian oil production occurred in April of last year, when it dropped by almost 9% as a result of Western sanctions over Ukraine.
But since then, Russia has succeeded in establishing logistics networks, primarily in Asia, for its oil sales. Russian oil production increased by 2% in 2017 to 100.7 million barrels per day.
