War in Ukraine: risk of a “shock” for the world oil supply, fears the IEA

The International Energy Agency (IEA) said on Wednesday it feared a “shock” on world oil supply, following the sanctions against Russia taken after its invasion of Ukraine, while lowering its forecast for the request for 2022.

“The prospect of large-scale disruptions in Russian production threatens to create a global oil supply shock,” writes the agency, which advises developed countries on their energy policy, in a monthly report.

The war in Ukraine created high volatility on the oil markets, whose prices approached their record highs (Brent reached $139.13 on March 7) before falling back.

Russia is the world’s largest exporter, with 8 million barrels per day (mb/d) of crude oil and refined products destined for the rest of the world.

If the United States and the United Kingdom decided on an embargo on Russian oil following the invasion of Ukraine, the energy sector is excluded from European sanctions in particular. However, the IEA notes that many companies – oil companies, brokers, banks… – have themselves turned away from Russia.

She estimates that 3 mb/d of Russian oil could be unavailable from April, a volume that could increase if the sanctions become more severe or if public condemnations of Russia increase.

Faced with these losses, “there is little sign of an increase in supply from the Middle East or a significant reallocation of trade flows”, notes the IEA.

The Organization of the Petroleum Exporting Countries (OPEC) and its OPEC+ allies, notably Russia, are refusing to increase production to relieve the market, sticking to a gradual increase of 400,000 barrels per day each month .

The countries with additional production capacities – Saudi Arabia and the United Arab Emirates – show no desire to open the tap more, while the prospect of a return of Iran, within the framework of a possible agreement on the nuclear file, will not be immediate.

The IEA estimates that Iranian exports could increase by around 1 mb/d over six months, so not enough to offset the loss of Russian oil.

On the demand side, the IEA has also revised down its growth forecast for 2022 by around 1 mb/d, due to the effect of the increase in commodity prices and the sanctions against Russia on the economy. world.

Global demand is now expected to rise by 2.1 mb/d this year, to a total of 99.7 mb/d.


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