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Seeking for alternative to Russian oil - is there potential game changer?

Oil&Gas Materials 16 March 2022 15:31 (UTC +04:00)
Seeking for alternative to Russian oil - is there potential game changer?
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, March 16

By Leman Zeynalova – Trend:

The International Energy Agency estimates that amid the Russian-Ukrainian war, from April, 3 mb/d of Russian oil production could be off-line As a result, total oil production plunges to around 8.6 mb/d in April, Trend reports.

So, in search of alternatives, Saudi Arabia (2 mb/d) and the UAE (1.1 mb/d) come to the spotlight, the OPEC+ countries holding the majority of the world’s effective spare capacity. But the IEA analysts think that all of this is not immediately available.

“If a decision to boost output beyond the current agreed OPEC+ targets is made, it would take around four to eight weeks for the extra Gulf barrels to reach consuming markets,” the agency said in its recent report.

Going ahead, Iran could be another source of substantial additional supply if sanctions are lifted, but its return to the market would not be immediate, IEA believes.

“Talks between Tehran and the West to revive the 2015 nuclear deal have hit pause, but if and when a deal is struck it could take at least another month before sanctions are formally eased. At that point, we expect production to ramp up by more than 1 mb/d within six months to reach full capacity of 3.8 mb/d. Iran would also act swiftly to sell 100 million barrels of oil in floating storage but it would likely take many months to fully off-load the oil (Iranian tankers, for example, would need to be re-certified and insured),” says the agency.

Venezuela could provide a modest amount of extra oil, if US sanctions were eased.

“If that were the case, we believe it could increase production by an additional 200-300 kb/d in three to four months, lifting supply to around 1 mb/d. We do not expect that levels above 1 mb/d could be sustained without significant investment and repairs to battered infrastructure and there is no evidence that either is underway,” reads the latest report from the IEA.

Iraq should be able to provide a significant amount of extra barrels, however, lingering bottlenecks in ageing infrastructure in the southern part of the country are currently restricting sustainable capacity.

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Follow the author on Twitter: @Lyaman_Zeyn

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