Increase in Russian Oil Production Despite US and EU Sanctions

Production Volume Increased by 0.1% Compared to Last Month Earlier This Month
Price Ceiling System Seems to Have Had No Impact

[Asia Economy Reporter Hyunji Kwon] Although the United States and the European Union (EU) have been implementing a price cap on Russian crude oil since the end of last year, Russia's oil production slightly increased in early this year.

According to major foreign media, from the 1st to the 9th of this month, Russia's daily oil production was 10.9 million barrels, a 0.1% increase compared to the same period in December last year. Crude oil exports and petroleum product volumes increased by 1.2% and 1.4%, respectively.

As part of sanctions against Russia, the United States and the European Union started the price cap on Russian crude oil on the 5th of last month. The purpose was to prevent Russia from using oil sales to fund the Ukraine war and to stabilize the sharply rising crude oil prices after the war. The price cap limits the price of Russian crude oil to below $60 per barrel, and companies that trade above this limit are prohibited from receiving insurance and financial services.

Nevertheless, the increase in Russian oil production is interpreted as the price cap not having a full effect yet. However, if the sanctions continue, oil production is expected to decrease.

The United States announced that starting next month, it will implement the price cap on petroleum products following crude oil.