Bloomberg's Daily Op-Ed -- Russia Crude Oil Production Cut -- February 13, 2023

This is a much better analysis of the Russian budget than provided by the comments below: https://www.osw.waw.pl/en/publikacje/analyses/2022-12-12/russias-war-budget-2023-2025. Archived. This is an incredibly bleak report / analysis.

In the op-ed below:

• one glaring data point left out (actually two);
• writer does not explicitly state but I certainly infer she is part of "group think" when it comes to the reason Russia gives for cutting production;
• and, then this non-sequitur with no explanation for her opinion: "... and yet, the past few days have laid bare Moscow’s weaknesses, too."

I assume the weakness is that Russia was unable to thwart the EU's decision to go ahead with price caps despite threat of production cut by Russia.

From Bloomberg today: 

Russia’s plan to cut oil production by 500,000 barrels a day next month — roughly 5% of its January output and 0.5% of global supply — was a show of strength. In response to what Kremlin officials call the West’s “destructive energy policy,” this was supposed to be a reminder that President Vladimir Putin still holds crucial hydrocarbon cards.

And yet, the past few days have laid bare Moscow’s weaknesses, too.

Friday’s announcement was no shock. Russia has been making liberal use of the energy weapon for months. Officials, and indeed Putin himself, explicitly threatened output cuts in response to sanctions and “stupid” price caps. Moscow does have an agreement to target a certain level of supply as part of the OPEC+ oil producers’ club, but unilateral reductions are not unheard of.

It is, though, bad news for the global economy, pushing up the oil price and threatening to stoke inflation at a time when Chinese consumption is recovering. Russia’s partners in OPEC+, meanwhile, are more concerned with keeping output steady than filling the gap.

Russia may also cut further. Alexander Isakov of Bloomberg Economics points out that early February production stood at 10.9 million barrels a day, but the budget was built around 9.8 million barrels — leaving space for more pain to be inflicted.