Russia's oil production in 2022 may fall by 17% amid West's sanctions: Russian Finance Min

Russia’s oil production this year could decline by as much as 17% because of Western sanctions, the country’s Finance Minister Anton Siluanov said on Wednesday. In the wake of Moscow’s “unprovoked” invasion of Ukraine, US and Canada have imposed an embargo on Russian oil imports. Meanwhile, the European Union (EU) has vowed to phase out the oil imports in upcoming months and has already agreed on its sixth package of sanctions encompassing plans to do the same.

“Will there be a decline in [oil] production? There will be. In what volumes? Seventeen per cent, a little less, a little more, it's possible” Anton Siluanov told reporters on Wednesday. "It is still difficult to assess how energy sales will continue,’ he added.

Europe is a major customer of Russian oil. Earlier, the International Energy Agency forecast predicted that almost three million barrels a day will be turned off starting in May. That would reduce output to fewer than nine million barrels a day, a larger pullback than other analysts have predicted. Regardless, President Vladimir Putin had, earlier this month, threatened to redirect considerable oil supplies from Europe to Asia.

Oil embargo

The sixth package of sanctions against Russia may include some form of an oil embargo, Executive Vice President of the European Commission (EC) Valdis Dombrovskis said. As the bloc moves forward to completely phase out Russian coal by August, the top EU official emphasised that it was necessary to make sure the damage to the European Union’s member states is minimised. The bloc has imposed five packages of sanctions on the Russian Federation till now, largely scaling down its business in Europe.

"We are working on a sixth sanctions package and one of the issues we are considering is some form of an oil embargo. When we are imposing sanctions, we need to do so in a way that maximizes pressure on Russia while minimizing collateral damage on ourselves," Dombrovskis told The Times.

However, he stopped short of disclosing the details of the oil embargo but said that it could either include a gradual phase-out or imposition of tariffs beyond a certain price cap.

(Image: AP)