Page 10 - FSUOGM Week 33 2022

FSUOGM POLICY FSUOGM

Western sanctions have only had "limited

effect" on Russian oil output: IEA

RUSSIA WESTERN sanctions have only had a “limited 80,000 bpd, this year versus the level in 2021,
impact” on Russian oil output, the International reaching 10.88mn bpd. This contrasts with the
Russia has been able Energy Agency (IEA) concluded in its August oil oil cartel’s previously forecast of a 1.6% drop to
to offset difficulties with market report, while OPEC has projected that its 10.63mn bpd. In 2023, OPEC now projects that
European buyers to output could climb modestly this year. production will fall by 3.36% to 10.52mn bpd.
some extent by ramping Western countries have been cutting back on OPEC’s optimistic forecast contrasts signif-
up shipments to Asia. Russian oil purchases and some, including the icantly with that of the Russian government,
US and the UK, have outright banned deliveries, which said in early June it expected a 17% slump
while financial and other sanctions have made in supply this year.
it harder for willing buyers to complete transac- The IEA noted that “the outlook for world oil
tions. Nevertheless, the IEA stated in its report supply has been revised upwards, with more lim-
that Russian oil production had only fallen 3% ited declines in Russian supply than previously
since the level prior to Moscow’s invasion of forecast.”
Ukraine, or 310,000 barrels per day below in July. The EU is preparing to ban seaborne imports
Meanwhile, its exports were down by 580,000 of Russian oil this December and to embargo
bpd. Russian oil products as well in February 2023. In
While Western buyers have shunned Rus- its report, the IEA projected this would result in
sian oil, much of these supplies have instead “further declines,” as around 1mn bpd of prod-
been bought up by buyers in India, China and ucts and 1.3mn bpd of crude “would have to
Turkey, eager to exploit the heavy discount that find new homes.” The benefactors will include
they currently trade at versus Brent. An increase Saudi Arabia, which a number of European oil
in domestic demand in Russia also played a role. buyers have reached out to help replace Russian
While Russian oil exports to Europe, the US, volumes.
Japan and South Korea have slumped by nearly At the same time, the IEA has raised its 2022
2.2mn bpd since the invasion, China replaced forecast for global oil demand growth by 380,000
the EU as the biggest Russian oil importer in bpd, to 2.1mn bpd, noting that soaring natural
June. gas and power prices were “incentivising gas-to-
Russian oil production actually rose slightly oil switching in some countries.” The global heat-
last month to 9.8mn bpd, from 9.78mn bpd in wave this summer has also led to increased use
June, although its export revenues fell to $19bn, of oil in power generation, particularly in Europe
from $22bn, the IEA said, as export volumes but also in the Middle East and across Asia.
dropped 115,000 bpd month on month, and the The Paris-based agency added that the EU’s
price discount was maintained. commitment to reduce gas use by 15% from
Meanwhile, OPEC predicted in its own report August 2022 to March 2023 would “increase oil
last week that liquid hydrocarbons production consumption by roughly 300,000 bpd for the
in Russia would expand by a modest 0.77%, or next six quarters.” ™

P10 www. NEWSBASE .com Week 33 17•August•2022