Sanctions are having an effect
Russia’s oil production is falling sharply
4/29/2022, 5:37 p.m
Russian oil producers are finding fewer buyers due to western sanctions. According to a Russian media report, this is now also restricting oil production. From March to April, the decline was already 8.7 percent – for the year as a whole, the Russian Finance Minister expects a much higher value.
According to a media report, two months after the start of the war against Ukraine, oil production in Russia has fallen significantly. “In the first 26 days of April, the average daily production in Russia under the conditions of US and EU sanctions after the special operation in Ukraine fell by 8.7 percent compared to March,” reports the daily Kommersant. Russian media can only describe the war in Ukraine as a “special operation”.
According to the newspaper, 1.37 million tons of oil are extracted from the earth every day. According to official information, funding had already fallen slightly by 0.4 percent in March compared to the previous month. Finance Minister Anton Siluanov recently warned that production for the year as a whole could fall by 17 percent due to the sanctions.
One of the Russian companies most affected is the state oil company Rosneft, headed by its boss Igor Sechin, a close confidant of Kremlin chief Vladimir Putin. At Rosneft, the cuts in funding are already almost 20 percent, according to Kommersant.
From mid-May, EU companies will only be able to buy oil from Rosneft and Gazpromneft if this is directly necessary to supply the EU with energy. Oil traders are therefore already withdrawing from both sanctioned companies. A further complication for Rosneft is that partner refineries in Russia have reduced their production. Only recently, at an auction, the company could not find a buyer for oil that was supposed to be paid for in rubles.