Russia's energy weapon looks increasingly puny

Markets mostly shrugged off Russia's threat to curb crude production in response to Western sanctions.

Why it matters: It shows that Putin's decision to invade Ukraine has left Russia with less leverage against the West than he may have once believed it had.

Driving the news: Russian state officials announced Friday that the nation plans to cut oil production by about 5% next month, in response to Western efforts to cap the prices at which Russia sells its oil.

The impact: While crude oil prices rose on the news, it wasn't much of a gusher.

• Both Brent crude (the European benchmark) and America's West Texas Intermediate rose about 2%, leaving prices around where they've hovered over the last few months.

What they're saying: "We consider today’s news to be a significant milestone," wrote oil industry analysts at ClearView Energy Partners, a research firm. "In today’s action, Russia is firing its own crude weapon at the West."

But, but, but: Though Russia is an energy giant, in the face of sanctions it has shifted most of its oil exports to its relatively few remaining friends — China, India and Turkey.

• That effectively reduces the impact of any efforts to use the so-called "oil weapon" against its adversaries in the West, since the West buys a lot less of its oil than it used to.

Context: Last month former deputy Russian energy minister Vladimir Milov — now an opposition politician living abroad — told the Wall Street Journal that as a result of the war, "Russia will have a smaller market share in oil and gas, it will make less profit and it has lost some of its geopolitical leverage as well."

• Axios recently pointed out that the country's financial position appears to be deteriorating rapidly, thanks to a collapse in energy revenues.
• According to the Russian finance ministry, the average price of Russia's benchmark Urals grade oil was $49.48 in January — a 40% discount to Brent crude's $84 average for the month.

The bottom line: The lackluster response to Friday's threats to cut crude oil output suggests its leverage over the market is also eroding fast.