Page 10 - FSUOGM Week 37 2022

FSUOGM PERFORMANCE FSUOGM

IEA forecasts 17% slump in Russian

oil output by February next year

RUSSIA RUSSIA oil production is poised to drop by 17% A significant uncertainty is how effective
by February next year compared with the pre- the oil price cap proposed by G7 members will
Russian oil output is war output, the International Energy Agency have on Russian exports. The cap will work by
set to slump with the (IEA) reported in its monthly oil report this preventing the insurance of oil tankers carrying
introduction of the EU’s week, as a result of the EU imposing its embargo shipments to buyers that are not complying. But
embargo. on some of the country’s exports. its success will depend on whether major Rus-
The EU finalised plans earlier this year to sian oil buyers in Asia, such as China and India,
impose a ban on seaborne crude oil shipments will sign up to the scheme. The IEA said some
from Russia this December, either on the spot third countries were unlikely to agree on the cap,
market or under existing contracts, and the presenting an opportunity for Russian oil to be
embargo will be extended to oil products two rerouted.
months later. Pipeline imports from Russia will The IEA meanwhile lowered its forecast
still be permitted, representing a compromise to for global oil demand this year by 110,000
Hungary and other countries in Central Europe bpd.
that rely heavily on oil deliveries via Russia’s Dru- “Growth in global oil demand continues
zhba pipeline system. to decelerate,” the Paris-based agency said, as
The fall in Russian production of 1.9mn bar- a result of a slowdown in developed econo-
rels per day predicted by the IEA by next Febru- mies and the ongoing impact of coronavirus
ary is lower than the 3mn bpd drop it forecast in (COVID-19) lockdowns in China. On the other
March, it still highlights the significant impact hand, “large-scale” gas to oil switching for power
that the EU ban could have, even as Russian generation as a result of soaring global gas prices
exporters scramble to divert supplies to other has meant the slowdown in oil growth is only
markets, namely in Asia. marginal.
Russian output is set to drop from 11mn bpd As it stands, the IEA predicts that global
of crude oil and petroleum products last month – growth in demand will amount to 2mn bpd in
hardly down from the pre-war level – to 10.2mn 2022, reaching a total of 99.7mn bpd this year,
bpd by December and 9.5mn bpd by 2023. The and climb a further 2.1mn next year, finally
IEA had said last month that sanctions were only exceeding the pre-pandemic level of 101.8mn
having a limited impact on Russian hydrocarbon bpd. OPEC is more bullish on the outlook, fore-
exports, but the latest forecast suggests the effect casting a rise in demand of 3.1mn bpd in 2022
will be more meaningful within a year. and 2.7mn bpd in 2023.™

P10 www. NEWSBASE .com Week 37 15•September•2022