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Oil Soars as Russia Cuts Output


FILE: An oil tanker is moored at the Sheskharis complex, part of Chernomortransneft JSC, a subsidiary of Transneft PJSC, in Novorossiysk, Russia, Tuesday, Oct. 11, 2022. This is one of the largest facilities for oil and petroleum products in southern Russia.
FILE: An oil tanker is moored at the Sheskharis complex, part of Chernomortransneft JSC, a subsidiary of Transneft PJSC, in Novorossiysk, Russia, Tuesday, Oct. 11, 2022. This is one of the largest facilities for oil and petroleum products in southern Russia.

Oil prices shot upward Friday after Russia slashed its crude output in response to a Western price cap that was imposed on exports after Moscow's invasion of Ukraine.

Oil prices shot upward Friday after Russia slashed its crude output in response to a Western price cap that was imposed on exports after Moscow's invasion of Ukraine.

Europe's benchmark Brent oil and US counterpart WTI crude jumped more than two percent after Russian deputy prime minister Alexander Novak cut production by 500,000 barrels per day, or five percent of output.

"Crude prices reacted positively to the news, considering that so far Russian oil production has been relatively resilient," said UBS analyst Giovanni Staunovo.

"The move ... aims to improve oil revenues by narrowing the discount of Russian oil to Brent."

An EU-wide ban on Russia oil products -- like diesel, gasoline and jet fuel -- came into effect Sunday alongside a Group of Seven (G7) price cap on the same items.

That expanded on the EU embargo on seaborne oil deliveries introduced two months ago -- when it also established with G7 partners a $60-dollar-per-barrel cap for Russian exports.

Oil, already winning strong support in recent weeks from top consumer China's economic reopening from the pandemic, rebounded further on the news from Novak, who in charge of Moscow's energy policy.


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