BAKU, Azerbaijan, April 14. Russian oil supplies are set to fall further, as refiners extend run cuts, Trend reports with reference to the International Energy Agency (IEA).
“Russian oil supply and exports continue to fall. So far in April, roughly 700 kb/d of production has reportedly been shut in. We assume these losses will grow to an average 1.5 mb/d for the month as Russian refiners extend run cuts, more buyers shun barrels and Russian storage fills up. From May onwards, close to 3 mb/d of Russian production could be offline due to international sanctions and as the impact of a widening customer-driven embargo comes into full force,” IEA said in its latest report.
The agency notes that while some buyers, most notably in Asia, increased purchases of sharply discounted Russian barrels, traditional customers are cutting back.
“For now, there are no signs of increased volumes going to
China, where refiners have cut runs as a recent surge in Covid
cases and new restrictions have dented oil demand. The stringent
lockdowns in China have led us to further revise down our estimate
for
oil demand in 2Q22 and for the year as a whole. In addition, more
complete demand data for 1Q22, especially in the US, was sharply
lower than preliminary estimates. As a result, global oil demand
has been reduced by 260 kb/d for 2022 and is now forecast to
average 99.4 mb/d, up by 1.9 mb/d from 2021,” the report says.
IEA believes that lower demand expectations and steady output increases from Middle East OPEC+ members along with the US and other countries outside the OPEC+ alliance should bring the market back to balance.
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