In the aftermath of Russia’s invasion of Ukraine, the International Energy Agency (IEA) believes that that three million barrels per day (bpd) of Russian oil and products may not make their way to market starting in April, as sanctions bite and purchasers hold off, the agency said.

The Paris-based IEA predicted that rising commodity prices and Russian sanctions will “significantly impair global economic growth” and have an influence on inflation, painting a dismal picture of undersupply and uncertainty for the oil market.

It was the IEA’s first monthly oil report since Russia’s invasion of its neighbour momentarily propelled Brent crude to nearly $140 a barrel. The IEA represents 31 primarily industrialised nations but not Russia.

“We see a reduction in total (Russian) exports of 2.5 million bpd, of which crude accounts for 1.5 million bpd and products 1 million bpd,” the IEA said in its monthly oil report.

The IEA additionally also predicted a lowering of domestic demand for oil products in Russia itself.

“These losses could deepen should bans or public censure accelerate,” the Paris-based IEA said.

Russia sells between 7 and 8 million barrels of oil and products every day.

The International Energy Agency (IEA) cut its prediction for global oil consumption for the second to fourth quarters of 2022 by 1.3 million bpd. It lowered its full-year growth prediction by 950,000 barrels per day to 2.1 million barrels per day, for an average of 99.7 million barrels per day.

This would be the third year of demand below pre-pandemic levels, with the agency predicting a recovery in 2022.

With top OPEC+ producers Saudi Arabia and the United Arab Emirates not fully opening their taps, the IEA does not expect output increases from the United States, Canada, and other countries to completely eliminate global undersupply.

According to the IEA, the world would face a supply shortage of 700,000 bpd in the second quarter.

Storage levels in OECD countries fell to their lowest levels since April 2014 in January, according to the report.

(Adapted from MoneyControl.com)

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