Oil Stocks Jump After Russia Responds To Western Sanctions: What You Need To Know

Oil prices climbed Friday after Russia announced a voluntary production cut of 500,000 barrels per day in March in response to Western price caps.

Brent crude rose as much as 2.6% to trade above $86 a barrel, while West Texas Intermediate moved above $80 a barrel, sending the United States Oil ETF USO 2.08% higher.

The move is an indication of the impact of sanctions that have been placed on the country’s output over the last three months.

See Also: Johns Hopkins Professor Steve Hanke Says Price Cap On Russian Oil Will Further 'Politicize' Market - 'Customers Will Pay The Bill'

The reduction comes after a number of factors revealed this week, including disruptions in Turkey, Norway, and Kazakhstan, and accounts for about 5% of Russia's crude oil output.

The European Union banned seaborne imports of crude oil last week, and of oil products this week, prompting Russia to cut production to avoid price restrictions imposed by Western nations.

The reduction will help “restore market relations,” said Deputy Prime Minister Alexander Novak, adding that the decision was not made in consultation with the OPEC+ coalition.

The cut, however, does not apply to gas condensate. The combination of reduced Russian production and China’s reopening is expected to further tighten the oil market in the coming quarters.

Market Movers

Several oil stocks were among the biggest market movers during Friday’s morning session in response to Russia’s production output:

• ConocoPhillips COP was up 2.98%.
• Marathon Oil Corp MRO was up 4.09%.
• Schlumberger NV SLB was up 3.64%
• Devon Energy Corp DVN was up 3.1%.
• Occidental Petroleum Corporation OXY was up 2.72%.

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What’s Up With Russia’s February Offenses?

Investors will remember February 2022 when Russia invaded Ukraine, sparking the war, which sent Brent Crude over the $100 level for the first time since 2014.

Last week, on Feb. 2, at least five people were hurt and at least three people were killed after a new volley of missiles struck the eastern Ukrainian city of Kramatorsk, CNN reported.

The same day, the defense minister of Ukraine warned that Russia was preparing a significant new offensive and issued a notice that it might start on Feb. 24, the one-year anniversary of the invasion.

The potential attack would coincide with Russia's “Defender of the Fatherland Day” on Feb. 23, which celebrates its army.