Page 18 - RusRPTFeb23

2.7 IEA expects an inflection in oil markets in 2023 when demand will exceed supply
The International Energy Agency reports that oil demand this year will grow by 1.9mn b/d, to a record 101.7mn b/d, and supply by 1mn b/d, to 101.1mn bpd in its first monthly report for 2023 released on January 18. Russia’s federal budget is already under pressure from tumbling oil and gas revenues but with a bit of luck a rise in oil prices in the second half of this year could take some of the pressure off.
The oil market has already been hit by the oil price cap scheme and EU embargo on the import of Russian crude
that went into effect on December 5. It will receive a second blow when a similar two-speed embargo and price cap regime is introduced by the EU on February 5 that will further affect supplies. However, oil prices for Brent rose to $85 after the IEA released its report on January 18.
So far, the EU ban on crude has led to a fall in Russia’s exports of crude as international tanker companies shy away from Russian oil, afraid of secondary sanctions. The discount on the Russian Urals blend of oil has also blown out to almost 50% against the benchmark Brent blend.
However, analysts speculate that these changes in price and volume will be temporary while the market and the Russians find new routes and customers for its oil products. A similar thing happened in the first months of the war in Ukraine where Russian exports fell as traders avoided buying the Urals blend and the discount increased then too. However, after a few months traders in
18 RUSSIA Country Report February 2023 www.intellinews.com