The International Energy Agency (IEA) today voiced fears of a “shock” to global oil supplies following sanctions imposed on Russia after its invasion of Ukraine, revising its 2022 demand forecast.
“The prospect of a large-scale disruption of Russian production threatens to cause a global shock to oil supply,” the agency, which advises developed countries on their energy policy, said in its monthly report.
The war in Ukraine created strong volatility in the oil markets, where prices approached record levels (Brent reached $ 139.13 on March 7) before falling.
Russia is the world’s largest oil exporter, with 8 million barrels per day of crude oil and refined products destined for the rest of the world.
Although the United States and the United Kingdom have decided to impose an embargo on Russian oil following the invasion of Ukraine, the energy sector is exempt from European sanctions. In any case, the IEA notes that many companies – oil companies, stock exchanges, banks – have already turned their backs on Russia.
The agency estimates that as of April, 3 million barrels a day of Russian oil could no longer be available, an amount that could increase if sanctions become more severe or if Russia’s public condemnation becomes larger.
In the face of these losses, “there is little evidence of an increase in supply from the Middle East or a significant redistribution of trade flows,” the IEA said.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, most notably Russia, are refusing to increase production to ease market pressures, sticking to a gradual increase of 400,000 barrels a day each month.
Countries with additional production capacity – Saudi Arabia and the United Arab Emirates – are reluctant to open the taps, and the prospect of a return to Iran under a possible nuclear deal will not be immediate.
The IEA estimates that Iranian exports could increase by about 1 million barrels a day in six months, not enough to offset the loss of Russian oil.
On the demand side, the IAE also revised down its forecast for 2022 by about 1 million barrels per day due to the impact of rising commodity prices and sanctions against Russia on the world economy. .
Global demand is now expected to increase by 2.1 million barrels per day this year, reaching a total of 99.7 million barrels per day.
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