Paris (agencies)
Yesterday, the International Energy Agency expressed its fear of a “shock” in global oil supplies following the sanctions imposed once morest Russia following the attack on Ukraine, considering that replacing Russian oil quantities will not be easy immediately.
“The possibility of widespread disruptions to Russian production might trigger a global oil supply shock,” the agency, which advises developed countries on their energy policy, wrote in its monthly report.
The war in Ukraine led to significant fluctuations in oil prices, which approached record levels, as the price of a barrel of Brent crude reached 139.13 dollars on the seventh of March, before it retreated. Russia is the world’s largest exporter with eight million barrels per day of crude oil and refined products destined for the rest of the world.
The United States and the United Kingdom decided to impose a ban on their imports of Russian oil following the attack on Ukraine, but the energy sector was largely excluded from European sanctions in particular. The International Energy Agency notes that many companies, especially oil companies, brokers and banks, have moved away from Russia.
It estimates that three million barrels per day of Russian oil may not be available as of April, a quantity that might rise if sanctions are tightened or public condemnations of Russia increase.
In the face of these losses, “there are few indications of oversupply from the Middle East or a major redirection of trade flows,” notes the International Energy Agency.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies within the framework of OPEC +, especially Russia, refuse to increase their production to calm the market, and insist on a gradual increase of 400,000 barrels per day each month.
The International Energy Agency estimates that Iranian exports might increase by regarding 1 million barrels per day over six months, and thus not enough to compensate for the loss of Russian oil.
As for Venezuela, with which Washington has resumed dialogue, it will be able to make only a “modest” contribution if US sanctions are lifted.
Outside of “OPEC +”, other countries will certainly increase their production, especially Brazil, Canada, the United States and Guyana, but the capacity is “limited” in the short term. The United States, in particular, has great capacity with its shale oil reserves, but this will take months to achieve.
On the demand side, the International Energy Agency also lowered its growth forecast for 2022 by regarding one million barrels, per day, due to the impact of high prices of raw materials and sanctions once morest Russia on the global economy.
Global demand is expected to rise by 2.1 million barrels per day this year, to a total of 99.7 million barrels per day.
The International Energy Agency, which was set up in 1974 to respond to the oil shock, says it will publish this week recommendations to reduce demand in the short term. In some countries, it has been proposed, for example, to lower speed limits on the roads, reduce the prices of shared transport or resort to remote work.
The agency concluded that if the current situation presents a formidable challenge to energy markets, it also presents “opportunities” as “the current alignment between economic factors and energy security factors can accelerate the transition at the expense of oil.”
