a workover rig performs maintenance on an oil well in the permian basin oil production area near wink texas august 22 2018 russia will cut oil output by 500000 barrels per day in march deputy prime minister alexander novak said on friday following western bans on moscows crude and oil products implemented in the past two months the announced production decline amounts to roughly 5 of russias latest crude oil output which parisbased watchdog the international energy agency estimated was down at 977 million barrels per day in december the brent contract for april delivery was trading at 8626 per barrel at 11 am london jumping by 176 a barrel over 2 on the news compared to thursdays close price the frontmonth nymex wti contract with march expiry was at 7972 a barrel also gaining 2 from the previous settlement novak said that the reduction will help restore market relations according to a google translation of comments reported by state news agency tass he noted that the cut does not apply to gas condensate and will be calculated from actual output levels not from russias quota under the opec output agreement the decision was not made in consultation with the opec coalition which moscow cochairs opec producers must typically agree consensus on output policy with members bound to their targets but the group has previously allowed voluntary gestures that honor the spirit of existing output agreements in this case the russian decline would build on a previous opec decision to lower production by a combined 2 million barrels per day agreed in october last year other opec producers facing sanctions such as venezuela and iran have requested and received exemptions from their production quotas several opec delegates previously told cnbc that russia had so far signaled no intention to ask for similar accommodations the eu implemented bans on seaborne imports of crude oil on dec 5 and of oil products this week under a program passed by the g7 wealthiest nations western providers may continue to supply key financial and shipping services to transport russian volumes to nong7 destinations provided these fuels are purchased beneath specific price caps as previously stated we will not sell oil to those who directly or indirectly adhere to the principles of the price ceiling novak reiterated on friday adding that the price cap program could lead to oil and oil products shortages lower russian production together with chinas reopening should tighten the oil market further over the coming quarters ubs strategist giovanni staunovo said in a friday note to clients