The impact of sanctions and buyer aversion on Russian oil will take full effect from May onwards, the International Energy Agency (IEA) said on April 13.
Countering that, expected lower demand in China, output increases from OPEC+ producers and beyond plus a record draw on emergency oil storage by the U.S. and its IEA member allies ought to prevent any sharp deficit, the agency said.
Global demand is now expected to be balanced with supply in the second quarter at 98.3 MMbbl/d, the agency added, with the potential to calm soaring energy price inflation. It had previously expected market balance to be next achieved in the fourth quarter.
"For now, we assume [April] losses will grow to an average 1.5 MMbbl/d for the month as Russian refiners throttle back further and buyers shy away," the Paris-based body said.
"From May onwards, close to 3 MMbbl/d could be offline as the full impact of a widening customer-driven voluntary embargo on Moscow comes into effect."
The Russian shut-in is proceeding more slowly than the IEA predicted last month, when it forecast that the 3 MMbbl/d loss would take effect from April.
Some buyers, especially in Asia, have increased purchases of Russian oil, but there is no sign yet of increased buying from China, the IEA added.
Chinese coronavirus lockdowns and lower than expected first-quarter demand, especially from the U.S., prompted the IEA to lower its global oil demand forecast for the year by 260,000 bbl/d.
"Lower demand expectations and steady output increases from Middle East OPEC+ members along with the U.S. and other countries outside the OPEC+ alliance should bring the market back to balance," the IEA said.
Combined production from OPEC+ countries was 1.5 MMbbl/d below target in March in the widest undershot since the producer group introduced cuts in May 2020, the agency said, adding that it expects the shortfalls to increase.
The U.S. and other members of the 31-member IEA committed in recent weeks to a combined release of 240 MMbbl of oil from emergency storage. Since the announcement, crude prices have fallen by nearly $9 to about $105 a barrel.
Recommended Reading
Bechtel Awarded $4.3B Contract for NextDecade’s Rio Grande Train 4
2024-08-06 - NextDecade’s Rio Grande LNG Train 4 agreed to pay Bechtel approximately $4.3 billion for the work under an engineering, procurement and construction contract.
SPATCO Energy Exits RF Investment Fund
2024-08-15 - RF investment Partners said it invested in SPATCO Energy Solution’s $230 million continuation fund, which was led by Kian Capital Partners and Apogem Capital.
CrownRock Offloads Oxy Shares Two Weeks After Closing $12B Deal
2024-08-15 - Underwriters of the offering agreed to purchase CrownRock’s Occidental stock at $58.15 per share, which will result in approximately $1.719 billion in proceeds before expenses.
Delek Logistics Offering Senior Notes to Pay Off Debt
2024-08-15 - Delek Logistics Partners and its subsidiary plan to use the net proceeds from the senior notes offering to pay off a portion of the outstanding borrowings from its credit facility.
Dividends Declared in the Week of Aug. 12
2024-08-16 - As second-quarter earnings season wraps up, here is a roundup of select upstream, midstream and service and supply companies’ dividends declared in the week of Aug. 12.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.