US official: Russia’s crude output cut signals unsold oil

The decision by Russia to cut crude oil output by 500,000 barrels per day reflects its inability to sell all of its oil according to Ben Harris, US Treasury Department Assistant Secretary.

Russia’s Deputy Prime Minister Alexander Novak last week said it would voluntarily cut output beginning next month following the start of Western price caps on Russian oil and oil products on Feb. 5. The move to cut around 5% of output temporarily pushed up global prices.

On Thursday, the US Treasury official noted that Russia “cuts back on output because they just couldn’t sell it (the oil), not because they wanted to weaponize oil and refined products,” Harris said in remarks at the Argus Americas Crude Summit.

The cut follows embargoes and sanctions, including an unprecedented $60 a barrel price cap on its crude, by Western countries to punish Moscow for its invasion of Ukraine. Poland, Latvia, Lithuania and Estonia have pushed for lowering the crude oil cap.