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· Oil stock levels on national territory grew by Russia will also lose the wider energy war with
396,000 tonnes in October 2022 compared to the West starting with defeats in the coming
the closing stock levels in September 2022 and quarters in the expanding oil sanctions war,
closed at 472mn tonnes. and even more so in the coming years as Europe
In the first quarter, the IEA predicted an remakes its energy supplies. It will become
excess of oil on the market of about 1mn bpd, increasingly clear that India and China will not
but in the second that figure will decrease signif- be able to entirely replace Russia’s European cus-
icantly. By the third and fourth quarter, demand tomers, the IEA believes.
will already exceed supply by 1.6mn and 2.4mn On the same day the world’s largest oil com-
bpd respectively, pushing up prices, The Bell pany, Saudi Aramco, released its outlook for
reports. 2023. It also hopes for a Chinese recovery and
Just when the inflection point arrives will predicts additional demand for jet fuel, pointing
depend on two factors: the speed of China’s to a shortage of new production of 4mn-6mn
economic recovery and the reaction of Russian bpd.
production to the EU embargo on petroleum After the IEA’s forecasts of record demand,
products. the price of Brent rose above $87 – the level of
The IEA is not optimistic about the prospects early December – before falling back to $85 by
for the Chinese economy, but nevertheless pre- the close of trading.
dicts that China will account for almost half of For Russia the price of Brent is critical for the
the global growth in oil demand (850,000 bpd) budget. The introduction of the crude embargo
in 2023, and will outstrip India. has already seen Russian budget revenues tum-
If the recovery turns out to be stronger than ble in December to end the year with a 2.3%
the forecast, “the cushion of stocks in storage of GDP deficit, almost all of which was due to
will disappear very quickly,” said the head of the a collapse in Urals oil prices in December. For
IEA, Fatih Birol, in the latter’s latest oil bulletin. 2023, the government is now forecasting that
Russia remains the “dark horse” in this the deficit will widen from around 2% to 3% as
year’s oil outlook, as it is not clear how it will a result of the changes in oil and gas revenues
respond to the new sanctions due in February. expected this year.
In December, production decreased slightly Currently it’s not unclear how the price of
to 11.2mn bpd, but the consequences of the Urals will be affected by the new sanctions after
embargo on petroleum products, which are February 5, but it is obvious that Russia cannot
much more widely distributed in Europe, will replace Europe with new customers for all oil
be much more severe, the IEA says. Currently products it currently exports there. Russia will
the agency is forecasting a decline in production have to reduce both refining and oil production
of 1.6mn bpd in the first quarter and of 1.3mn as a result. Domestic experts consider $40 per
bpd to 9.7mn bpd on average for the whole year barrel as the level that will cause severe problems
compared to 2022, The Bell reports. for the budget and in December-January, Rus-
Russian President Vladimir Putin has sian oil already approached this level. However,
already lost the winter energy battle with the Russia’s budget revenues may be rescued by the
West thanks to record imports of LNG and an inflection in demand in the second half of the
unusually warm winter. Birol believes that year, which could push oil prices up sharply. ™

P14 www. NEWSBASE .com Week 04 25•January•2023