Russia announced that it would reduce output by 500,000 barrels per day next month as retaliation for Western sanctions on its war in Ukraine.
Oil prices have risen due to the reduction of about 5pc in January production.
Since the EU and G7 started discussing the possibility of a price cut for Russian oil, the Kremlin has been hinting at it repeatedly. The caps came into effect at the end of last year.
Brent crude oil, which is the international benchmark for oil, has risen as high as 2.4pc since Moscow’s announcement. It is now heading towards $87 per barrel. West Texas Intermediate, however, rose as much as 2.5pc to almost $80.
This is because Vladimir Putin’s energy revenues have been hit hard by milder weather and surging gas supplies.
Putin slams the Bank of Russia over rising interest rates
Vladimir Putin has not been intimidated by the Bank of Russia and they have indicated that they may consider raising interest rates at their next meeting.
As was expected, policymakers kept the benchmark rate at 7.5%. However, they did not dilute it.
As Vladimir Putin’s invasion of Ukraine continues, he had been urging the Bank of Russia not to lose heart about Russia’s economic prospects.
Sources told Bloomberg that Kremlin officials desired a clearer indication that interest rates could fall later in the year following the central bank’s first board meeting in 2023.
In a statement that was attached to today’s rate decision, Governor Elvira Nabullina and her coworkers struck a hawkish tone.
In a statement, they stated that “if pro-inflation risk intensifies, the Bank of Russia may consider the necessity of an important rate increase at its forthcoming meetings.”
