IEA: Lower Demand Changes Everything For Oil Markets

IEA: Lower Demand Changes Everything For Oil Markets

Two months ago, the International Energy Agency sounded an alarm about global crude oil supply, predicting that Western sanctions on Russia would remove as much as 3 million barrels daily from the global oil market. Now, it has changed its mind.

In its latest Monthly Oil Market Report, the IEA said that slowing demand growth and rising production from other major oil economies will help weather the effect of the sanctions. In other words, it no longer expects that the market will swing into a deficit.

"Russia shut in nearly 1 mb/d in April, driving down world oil supply by 710 kb/d to 98.1 mb/d," the IEA wrote in the latest monthly edition of its report. "Over time, steadily rising volumes from Middle East OPEC+ and the US along with a slowdown in demand growth is expected to fend off an acute supply deficit amid a worsening Russian supply disruption. Excluding Russia, output from the rest of the world is set to rise by 3.1 mb/d from May through December."