Daily Management Review

IEA Now Believes The World Will Tide Over Lost Russian Oil Supply


IEA Now Believes The World Will Tide Over Lost Russian Oil Supply
Even with lower output from sanctions-hit Russia, the world will not run out of oil, the International Energy Agency (IEA) declared on Thursday, in a U-turn from its March prediction of a probable "global supply shock."
After warning on March 16 that 3 million barrels per day (bpd) could be shut in starting in April, the IEA revised that forecast again, noting that only 1 million bpd had gone offline.
The International Energy Agency (IEA) warned that production ramping up abroad and slower demand growth owing to China's lockdowns will prevent a large shortfall.
"Over time, steadily rising volumes from Middle East OPEC+ and the U.S. along with a slowdown in demand growth is expected to fend off an acute supply deficit amid a worsening Russian supply disruption," the IEA said in its monthly oil report.
According to the Paris-based organisation, the economic impact of additional restrictions on Russian energy being considered by the European Union could be modest.
"Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023," the IEA said, adding that curbs aimed at containing COVID-19 in China were driving an extended economic slowdown there.
Last month, roughly a million barrels per day (bpd) of Russian oil was blocked in, which was around half a million bpd less than the EIA projected last month.
If sanctions hinder additional purchases or expansion, the IEA predicts that figure would rise to 1.6 million bpd in May, 2 million in June, and over 3 million in July.
After the IEA sat out a US-led release in November because it observed no severe supply interruption at the time, the US and fellow IEA members committed to release 240 million barrels of oil in their second tapping of emergency stocks this year.
Russian exports increased by 620,000 barrels per day in April, returning to their January-February average, according to the IEA, as supply was redirected away from the United States and Europe, mostly to India.
The European Union remained the leading destination for Russian oil exports last month, down barely 535,000 barrels per day from the start of the year, according to the IEA.
The union now accounts for only 43 per cent of Russian oil exports, down from approximately 50% in the past.