Rise in OPEC and US oil production could balance out low Russian output – IEA
The International Energy Agency (IEA) argues that a steady rise in oil production from Middle Eastern OPEC members and the US, combined with a slowdown in demand growth from China in particular, could to fend off any supply deficit arising from Russian supply disruption.
PHOTO: Embankment of the city of Novorossiysk, Russia. Getty Images
The recent market outlook by the IEA contradicts its previous prediction in March. The energy watchdog then warned a “global supply shock” may arise as an 3 million b/d of Russian oil output would go offline in April. However, its latest outlook states that Russian production declined by just 1 million b/d.
EIA says that despite international pressure, Russian exports have largely been steady. But because major trading houses are winding down deals with Russian state-owned energy companies as part of self-sanctioning and restrictions, Russian oil production could come down by 3 million b/d in the second half of this year, it said.
The world is up against weaker economic growth, inflationary pressure and rising fuel prices over the coming months. An extended Chinese lockdown would also continue to curb some oil demand, the IEA says. Global oil demand is forecast to average 99.4 million b/d in 2022, around 1.8 million b/d higher on the year.
Global oil inventories have slumped by 45 million bbls to 1.2 billion bbls, the lowest since June 2020. Recent strategic oil reserve releases by the US and other IEA members have contributed towards the overall stock draw.
The US announced in early April it would release about 1 million b/d of crude from its Strategic Petroleum Reserves (SPR) over six months, to rein in runaway fuel prices amid rampant inflation and higher costs for consumers.
