Moscow expects crude oil production reductions of 9.3% this year and 9.8% in 2023 due to Brussels' partial embargo on Russian oil and petroleum products, it was announced today.

Under new Russian government budget guidelines, Russia will produce 9.3% less this year (to 475.3 million tons) and 9.8% less next year (to 472.8 million tons).

In the draft budget, fiscal and tariff policy for 2023 and the 2024 and 2025 periods, reported by the official TASS news agency, the reduction in crude oil production is also affected by discounts on sales of Russia's main export products, according to the Russian Finance Ministry.

In 2021, Russian oil production reached 524 million tons, and since the spring of 2021, Russia has been gradually increasing production due to the OPEC+ alliance agreements (Organization of the Petroleum Producing Countries [OPEC] and 10 allies, including Russia).

But since last March Russia has faced unprecedented international sanctions due to its military campaign in Ukraine, which affect the logistics chain, finances, ship insurance, and the ships themselves, which cannot dock at European Union (EU) ports.

In addition, the EU decided at the leaders' summit earlier this month to ban the purchase, import or transfer of oil and certain petroleum products from Russia by sea into the EU bloc.

The phase-out will take six months for Russian crude oil and eight months for other refined petroleum products.

In the 2024-2025 period, Russia will produce an average of 478 million tons, according to the source.

Russian Finance Minister Anton Siluanov said that Russia could lose up to 17% of oil production by 2022 due to sanctions, although Deputy Prime Minister Alexander Novak said that after a drop in production in April of one million barrels per day, indicators have begun to recover.

According to the Russian OPEC+ negotiator, there will be 600,000 barrels per day more in June than in May, and Russia is close to recovering February production levels.

Overall, according to Novak, Russia can produce 500 million tons of oil by 2022.

At the same time, the finance ministry forecasts that oil and gas revenues in Russia's 2022 budget will increase by 15.2% to 10.4 trillion rubles ($183,389 million).

In 2023 revenues will drop to 9.1 billion rubles ($160,661 million) and in 2024 to 8.4 billion rubles ($148,122 million).

The price of Russian oil (Urals) at the end of 2022 will be $80.1 per barrel, and is then expected to start declining and reach $61 in 2025, according to the Russian government.

Source: News to the Minute