BAKU, Azerbaijan, May 20. A collective oil supply response amid the possible ban on Russian imports remains extremely challenging, Trend reports with reference to Oxford Institute of Energy Studies (OIES).
OIES notes that a severe disruption in Russian supplies closer to 4 mb/d would see the SPR releases easing the near-term pressures before remerging year-end and persisting in 2023.
“Supply responses to the end of 2023 could originate from OPEC+ (+1.12 mb/d) and Iran (+0.23 mb/d), the US (+0.48 mb/d), Canada (+0.3 mb/d) and the rest producers and global liquids (+0.46 mb/d); bringing the total supply response to 2.6 mb/d versus 3.6 mb/d of Russian crude supplies at risk. Between May and October 2022, the planned SPR releases could add up to 1.3 mb/d of additional supplies each month,” reads the report.
EU refiners turned primarily to domestic markets and the US to close the gap of Russian crude supplies, with North Sea intake rising to 1.7 mb/d from 1.26 mb/d in 2021. High prices in EU are opening the arbitrage, with flows from the US, Asia and Middle East filling some of the products’ gap, albeit at a slower pace as routes are longer.
OIES notes that the SPR releases help ease balances but only temporary. US delivered nearly 90 percent of the 50 mbbls pledged SPR sales between January and April 2022, as it moves to the release of 180 mbbls between May and October 2022.
Oil markets are now more than ever subject to policy decisions and their effectiveness, increasing price volatility and exacerbated by reduced liquidity.
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