Russian oil production is rebounding and will continue to increase as shunned supplies may find indirect route to Europe, Kremlin says

Despite shunning its supplies, Russia is showing signs of recovery in its oil production.

Alexander Novak, the Kremlin's top energy official and deputy prime minister, said output increased by 200,000-300,000 barrels per day in May after declining by 1 million barrels per day in April.

Novak said Thursday at an event in Moscow that he expects further recovery in June.

Major customers stopped buying from Russia on their own, even though the European Union has yet to reach an agreement on a phased-in oil embargo in Moscow. Customers in Asian markets were allowed to pick up the slack at discounted rates because of this self-sanctioning by Western companies.

Europe may have a back door to Russia as well. Russian oil producers have sent their exports to other markets, where they could be diverted to Europe, Novak said Thursday.

Russia is still selling natural gas to Europe despite the recent gains in oil.

Half of the foreign customers of the state-controlled gas company opened accounts to comply with the country's demand to pay in rubles, according to Novak.

Russia's economy ministry has projected a full-year decline in energy output. The production of oil and oil products is expected to fall in the years to come.