IEA says 3mn b/d of Russian oil could be forced offline

IEA says 3mn b/d of Russian oil could be forced offline

London, 16 March (Argus) — The IEA has laid bare the enormity of the Ukraine conflict's potential effect on the oil market, saying sanctions could force at least 3mn b/d of Russian production offline as soon as next month and projecting that surging commodity prices will slash demand growth by more than 1mn b/d this year.

"As sanctions expand, companies shun barrels and, at the same time, opportunistic buying of massively discounted Russian crude sets in, the total amount of Russian oil lost to world markets is a moving target," the IEA said today in its monthly Oil Market Report (OMR). "Our initial assessment is that 3mn b/d of Russian oil could be shut in from April through the end of our forecast period."

The IEA estimates a sharp drop in Russian oil exports will account for 2.5mn b/d of the supply disruption, of which crude will make up 1.5mn b/d and products 1mn b/d. A fall in domestic demand for oil products will make up the rest.

"These losses could deepen should bans or public censure accelerate," the agency said.

The IEA's forecast assumes crude shipments continue through pipelines to EU countries, China and Belarus, that Russian oil companies owning refining assets in