Page 19 - RusRPTFeb23

Asia – in India and China in particular – stepped in to buy the very cheap Russian oil driven by market forces. Analysts assume that something similar will happen now, but where the export volumes and prices will settle remains a matter of debate.
The IEA predicts that there will be a turning point in the international oil market in the middle of this year. The latest IEA's Monthly Oil Statistics report including October 2022 data shows that for the main areas within the OECD: ·
· Total OECD production of crude oil, NGL and refinery feedstocks increased by 4.3% in October 2022 compared to October 2021. Refinery gross output of total products grew by 1.9% on a year-on-year basis.
· Net deliveries of total products decreased by 1.5% in October 2022 compared to October 2021.
· Oil stock levels on national territory grew by 396 kt in October 2022 compared to the closing stock levels in September 2022 and closed at 472 million metric tons.
In the first quarter, the IEA predicted an excess of oil on the market of about 1mn b/d, but in the second that will decrease significantly. By the third and fourth quarter, demand will already exceed supply by 1.6mn and 2.4mn b/d, respectively pushing up prices, The Bell reports.
Just when the inflection point arrives will depend on two factors: the speed of China's economic recovery and the reaction of Russian production to the EU embargo on petroleum products.
The IEA is not optimistic about the prospects for the Chinese economy, but nevertheless predicts that China will account for almost half of the global growth in oil demand (850,000 bpd) in 2023, and will outstrip India.
If the recovery turns out to be stronger than the forecast, "the cushion of stocks in storage will disappear very quickly," said the head of the IEA, Fatih Birol, in the IEA’s latest oil bulletin.
Russia remains the “dark horse” in this year’s oil outlook, as it is not clear how it will respond to the new sanctions due in February. In December, production decreased slightly to 11.2mbpd, but the consequences of the embargo on petroleum products, which are much more widely distributed in Europe, will be much more severe, the IEA says. Currently the agency is forecasting a decline in production of 1.6mn b/d in the first quarter and by 1.3mn b/d to 9.7mn b/d on average for the whole year compared to 2022, The Bell reports.
Russian President Vladimir Putin has already lost the winter energy battle with the West thanks to record imports of LNG and
an unusually warm winter. Birol believes that Russia will also lose the wider energy war with the West starting with defeats in the coming quarters in the expanding oil sanctions war, and even more so in the coming years as Europe remakes its energy supplies. It will become increasingly clear that India and China will not be able to entirely replace Russia’s European customers, the IEA
19 RUSSIA Country Report February 2023 www.intellinews.com