China lockdowns, SPR draw to offset Russian loss: IEA

China lockdowns, SPR draw to offset Russian loss: IEA

London, 13 April (Argus) — The IEA has cut its global oil demand growth forecast for this year on the back of Covid-19 lockdowns in China. This, together with a record emergency stocks release from the US and other IEA member countries, will help offset disruptions to Russian supply and should prevent a sharp deficit from developing, the Paris-based energy watchdog said today in its latest Oil Market Report (OMR).

The IEA maintains that sanctions and self-imposed embargoes will have a severe impact on Russian oil output, although the 3mn b/d loss that it predicted last month may take a month longer to materialise.

"So far in April, roughly 700,000 b/d of [Russian] production has reportedly been shut in. We assume these losses will grow to an average 1.5mn b/d for the month as Russian refiners extend run cuts, more buyers shun barrels and Russian storage fills up," the IEA said. "From May onwards, close to 3mn b/d of Russian production could be offline due to international sanctions and as the impact of a widening customer-driven embargo comes into full force."

As Russia's traditional customers cut back on purchases, some buyers in Asia are stepping in to take advantage of sharply discounted prices,